Cognizant Technology Solutions Corporation (NASDAQ: CTSH) plans to announce its results for the third quarter of 2013 on Tuesday, Nov. 5, 2013, before the market open. Following the release, the company will conduct a conference call at 8:00 a.m. (Eastern) to discuss operating performance for the quarter.
Cognizant provides information technology, consulting, and business process outsourcing services. Headquartered in Teaneck, New Jersey, Cognizant has over 50 delivery centers worldwide and approximately 164,300 employees as of June 30, 2013.
Wall Street, according to analysts polled by Thomson Reuters, expect Cognizant to earn $1.01 a share, up 11 percent from the 91 cents it earned last year. The company expects third quarter 2013 EPS to be $1.00 on a GAAP basis and $1.09 on a non-GAAP basis.
Cognizant may want to continue its positive momentum with earnings as it managed to beat the street's view thrice in the past four two quarters, with upside surprise between 1.1 and 4.6 percent. The consensus estimate has dropped by 2 cents over the past 90 days.
Quarterly revenue is expected to rise 19.3 percent to $2.26 billion from $1.89 billion a year-ago. Cognizant sees third quarter 2013 revenue to be at least $2.25 billion.
The solid demand environment for IT Services has been driven by regulatory, transformation services, channel strategy and digital marketing as well as emerging technologies namely, cloud, analytics, and mobility.
"We are modeling 3Q13 revenues of $2.250bn and EPS of $1.00, inline with the guidance. Although, the company does benefit from weak rupee, we expect the company to reinvest the savings back into business and maintain 19 – 20% adj op margin for the year," Deutsche Bank analyst Bryan Keane wrote in a note to clients.
Cognizant operates under three segments – Financial, Healthcare and Manufacturing/Retail/Logistics.
Cognizant expects Financial Services demand to remain stable in the third quarter. The vertical has outperform! ed over the past several quarters as a steady pickup in regulatory and risk management projects with an emphasis on growing mobility and analytics within the segment.
"The vertical has been lifted in recent quarters by strength in capital markets and retail banking and we expect this to continue with a balanced mix of maintenance and development work focused around cost cutting initiatives and achieving sustainable top line growth," Keane said.
Healthcare, which accounts for 25 percent of revenues, could continue to grow slower than the company average as pharma continues to struggle amid expiring patents, although work with payer clients should help offset some of the near term pharma weakness. Despite continued headwinds in the face of expiring patents, healthcare revenue grew 12 percent in the second quarter.
Manufacturing Retail and Logistics could witness upside given offshore's relatively low penetration rate in the vertical and retailers continuing margin pressures. The company noted a large win in the second quarter to provide supply chain initiatives with a leading retailer as well as expanding existing clients as an e-commerce partner. In the second quarter, the company posted 27 percent growth in the manufacturing vertical.
On a regional basis, Cognizant should get more than 70 percent of revenue from North America (NA) and at least 15 percent from Europe. In the second quarter, revenue from North America revenue grew 17 percent and Europe rose 37 percent. The company noted that client demand in NA ticked up in the second quarter specifically with software and services offerings.
"We see North America remaining as the main driver of Cognizant's growth in 3Q13, especially as clients show more amenability to vertical-specific BPO offerings in the United States and continue to see cost-cutting activities," Keane said.
Meanwhile, the UK remained Cognizant's largest European market at about 11 percent, followed by the rest of continental Europe making up 7 perce! nt of tot! al revenue. Positively, Infosys reported strength in Europe on the company's most recent earnings call, noting an uptick in demand. Investors will be hoping for Cognizant to see improving demand in Europe.
The market would look for any updates to the fiscal 2013 outlook. Early August, Cognizant said it expects its fiscal 2013 EPS expected to be at least $3.96 on a GAAP basis and $4.32 on a non-GAAP basis. Fiscal 2013 revenue is expected to be at least $8.74 billion, up at least 19 percent from 2012. Analysts expect earnings of $3.98 a share on revenue of $8.76 billion.
For the second quarter, the company reported net income of $300.4 million, or 99 cents a share, compared to $251.9 million, or 82 cents a share, in the second quarter of 2012. Quarterly diluted EPS on a non-GAAP basis, which excludes stock-based compensation expense and acquisition-related charges, was $1.07. Revenue for the second quarter rose 20.4 percent to $2.161 billion.
Cognizant shares, which trade at 18.6 times its 2014 consensus earnings estimate, have gained 17 percent since its last quarterly report. They traded between $60.92 and $90.01 during the past 52-weeks.
No comments:
Post a Comment