Earnings Update: Cognizant Technology Solutions Corporation (NASDAQ:CTSH) Just Reported Its Full-Year Results And Analysts Are Updating Their Forecasts

Last week saw the newest full-year earnings release from Cognizant Technology Solutions Corporation (NASDAQ:CTSH), an important milestone in the company's journey to build a stronger business. Cognizant Technology Solutions reported in line with analyst predictions, delivering revenues of US$19b and statutory earnings per share of US$4.21, suggesting the business is executing well and in line with its plan. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Cognizant Technology Solutions

Following last week's earnings report, Cognizant Technology Solutions' 28 analysts are forecasting 2024 revenues to be US$19.5b, approximately in line with the last 12 months. Per-share earnings are expected to rise 6.8% to US$4.56. In the lead-up to this report, the analysts had been modelling revenues of US$19.5b and earnings per share (EPS) of US$4.56 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$78.12. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Cognizant Technology Solutions at US$94.00 per share, while the most bearish prices it at US$65.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Cognizant Technology Solutions' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.8% growth on an annualised basis. This is compared to a historical growth rate of 4.4% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 10% per year. Factoring in the forecast slowdown in growth, it seems obvious that Cognizant Technology Solutions is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Cognizant Technology Solutions' revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$78.12, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Cognizant Technology Solutions going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Cognizant Technology Solutions that you need to be mindful of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.