Key insights
- Morgan Stanley lowered its price target for Cognizant (CTSH) due to a slower growth outlook, particularly in the Financial Services sector. This reflects concerns about discretionary spending and net interest income for banks. While the stock appears undervalued, the firm maintains an Equalweight rating, signaling limited near-term upside. Other firms like Guggenheim and TD Cowen have also lowered their price targets.
Investing.com - Morgan Stanley lowered its price target on Cognizant Technology Solutions (NASDAQ:CTSH) to $70 from $82 while maintaining an Equalweight rating on the stock. The stock currently trades at $55.11, down 33% year-to-date and near its 52-week low of $54.26, according to InvestingPro data.
The firm reduced its fiscal 2026 revenue growth estimate for Cognizant to 5.5% from 6.5% previously. Morgan Stanley now expects second-half revenue growth of 5%, down from its prior forecast of 7%.
The revised outlook reflects a lack of improvement in the discretionary spending environment and a more cautious view on the Financial Services sector. Morgan Stanley cited mixed data points and lower net interest income expectations from banks for 2026.
The firm adjusted its fiscal 2026 adjusted earnings per share estimate to $5.63 from $5.68. The new $70 price target reflects an approximately 11x multiple on Morgan Stanley’s fiscal 2027 adjusted EPS estimate of $6.21. The stock currently trades at a P/E ratio of 12.1x, and InvestingPro analysis suggests Cognizant appears undervalued at current levels.
Morgan Stanley noted the new target represents a premium to Cognizant’s current trading level of approximately 9x, stating the market has likely modestly overreacted to recent news, though the firm finds it difficult to be constructive on the sector currently.
In other recent news, Cognizant Technology Solutions has been granted three new U.S. patents, bringing its total to 65 in the United States and 88 globally. These patents, issued between February and March 2026, focus on enhancing decision-recommendation systems, automatic creation and tuning of neural network activation functions, and improving distributed machine learning. Meanwhile, Guggenheim has lowered its price target for Cognizant to $85 from $100, citing a soft demand outlook but maintaining a Buy rating. In a related development, TD Cowen also reduced its price target to $71 from $85 due to concerns over AI-driven deflation in traditional services, though they expressed confidence in new AI-driven opportunities.
Cognizant has also been selected by OpenAI as a partner to deploy Codex for enterprise clients, integrating it into their Software Engineering Group’s workflows. This partnership aims to make Codex a standard capability for software development. Additionally, Cognizant launched its AI Factory, a multi-tenant cloud offering built on infrastructure from Dell Technologies and NVIDIA. This platform is designed to support the AI lifecycle from development to deployment across hybrid and multi-cloud environments. These recent developments highlight Cognizant’s ongoing efforts to expand its AI capabilities and partnerships.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.