Update shared on27 Aug 2025
Fair value Decreased 1.14%Analysts have modestly reduced their price target for Cognizant Technology Solutions from $87.63 to $86.63, citing sector underperformance, over-optimism, and macroeconomic uncertainty driving a more cautious, neutral outlook.
Analyst Commentary
- Analysts note that the payments, processors, and IT services industries have materially underperformed the S&P 500 Index year-to-date due to elevated investor expectations ahead of the U.S. November election.
- Recent year-end optimism in the sector has proven overly optimistic, leading to more cautious outlooks.
- Ongoing trade uncertainty and concerns about consumer spending are clouding the outlook for the sector more than at any point in the past five years.
- In this environment, analysts are prioritizing "high-quality compounders" with proven consistent sales growth, margin expansion, and strong free cash flow generation.
- Current sentiment favors a more neutral or defensive stance on Cognizant, given sector-wide unpredictable macroeconomic trends.
What's in the News
- Clorox has filed a lawsuit against Cognizant, alleging that hackers accessed Clorox's network in 2023 by simply requesting credentials from Cognizant's service desk, raising concerns about Cognizant's security protocols (Reuters).
- Cognizant provided Q3 2025 revenue guidance of $5.27–$5.35 billion (4.6%–6.1% YoY growth) and full-year 2025 revenue guidance of $20.7–$21.1 billion (4.7%–6.7% YoY growth), reflecting steady business momentum.
- Major product launches include AI Training Data Services for rapid enterprise AI deployment, Cognizant Agent Foundry for autonomous AI agent orchestration, and an AI-led autonomous contact center solution in partnership with Google Cloud.
- Strategic partnerships were announced with WRITER (enterprise agentic AI), Salesforce (expansion of Agentforce and customer operations transformation), and Lineage (customer service enhancement via agentic AI), as well as IT platform and support service overhauls for Kramp and SmartestEnergy.
- Cognizant repurchased 4.5 million shares ($354 million) in the recent tranche, completing 28.65% of its buyback program, indicating continued capital return to shareholders.
Valuation Changes
Summary of Valuation Changes for Cognizant Technology Solutions
- The Consensus Analyst Price Target remained effectively unchanged, moving only marginally from $87.63 to $86.63.
- The Future P/E for Cognizant Technology Solutions remained effectively unchanged, moving only marginally from 17.72x to 17.51x.
- The Discount Rate for Cognizant Technology Solutions remained effectively unchanged, moving only marginally from 8.84% to 8.81%.
Disclaimer
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