JPMorgan Raises Price Target on Cognizant

From Barron’s:

Indian IT services provider Cognizant (CTSH) is scheduled to report its third-quarter earnings tomorrow.

J.P. Morgan raised its Q3 revenue estimate by $4.5 million to $2.27 billion on strong rupee and solid Q3 results already reported by Cognizant’s peers. Here are analysts Tien-tsin Huang and Puneet Jain:

[Tata Consultancy Services] TCS and [Infosys] INFY reported solid upside in C3Q revenue, driven by strong discretionary spending. Encouragingly, growth was broad based at peers, which bodes well for CTSH.

We expect a nice beat in C3Q results, relative to the company’s revenue guidance (of $2,250M+) and consensus estimate of $2,256M.

The broker expects Cognizant to raise its 2013 guidance:

We expect the company to raise its FY13 revenue growth guidance from 19% to 20%.

The $100 price target implies 18 times J.P.Morgan’s 2015 EPS estimate, or 20.8 times the broker’s 2014 estimate.

UBS is more cautious, setting a $92 price target, or 18.3 times their 2014 earnings.

Cognizant last traded at $87.8, giving the JPM price target a 14% upside.

Posted by on November 4th, 2013 at 11:09 am


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