Client-First Approach Underpins Cognizant's Success
Close ties with market-leading companies ensure significant recurring business.
We have raised our fair value estimate for Cognizant Technology Solutions (CTSH) to $69 per share from $64 as we are more optimistic about the company's long-term profitability and competitive position. We believe digital readiness and cloud computing are reshaping client demand, legacy services, and vendor go-to-market strategies in the IT services industry. As these forces resonate through the industry, we think some vendors, like Cognizant, are better positioned than others to address the advancing digital and cloud agendas of clients.
Despite the risk of short-term macroeconomic challenges, we are bullish on Cognizant’s long-term outlook. We think the company has mostly avoided becoming bogged down in large legacy systems integration and data center outsourcing work like some of its services peers. In addition, we think its highly relevant digital and software platform capabilities, combined with its strong vertical positions in healthcare and financial services, will sustain its long-term market standing, supporting our narrow economic moat rating.
Andrew Lange does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.