Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Cognizant Technology Solutions Corporation (NASDAQ: CTSH) is a professional services company. The Company operates in four segments: Financial Services (FS), Health Sciences (HS), Products and Resources (P&R), and Communications, Media and Technology (CMT).

Kalkine’s American Technology Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

Stock Performance:

• The stock has given a return of 9.98% in the last six months but has corrected by 9.62% in past one year.
• The stock is currently in between its 52-week range of USD 75.40 and 52-week low price of USD 51.33. Post the announcement of Q1FY23 results the stock has given a return of around 8.92%.
• The price is currently trading above its long-term (200-day) SMA and its short-term (50-day) SMA , with the current RSI of around 61.88.

             

1.2 The Key Positives, Negatives, and Investment summary      

1.3 Key Metrics:

CTSH has been successful in efficiently managing the cost at all levels of operations, which is evident by higher profitability ratios at each level except the gross margins. Furthermore, the company has higher short-term liquidity as well as lower balance sheet risk, evident by lower debt/equity ratio.

1.4 Top 10 shareholders:

The top 10 shareholders together form ~36.74% of the total shareholding, signifying diverse shareholding. The Vanguard Group, Inc., and BlackRock Institutional Trust Company, N.A. are the biggest shareholders, holding the maximum stake in the company at ~8.57% and ~5.08%, respectively.

Section 2: Business Updates and Corporate Business Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

 2.2 Insights of Q1FY23:

Section 3: Key Risks and Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

  Stock Performance:

• The stock has given a return of 9.98% in the last six months but has corrected by 9.62% in past one year.
• The stock is currently in between its 52-week range of USD 75.40 and 52-week low price of USD 51.33. Post the announcement of Q1FY23 results the stock has given a return of around 8.92%.
• The price is currently trading above its long-term (200-day) SMA and its short-term (50-day) SMA , with the current RSI of around 61.88.

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings per share Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is May 22, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.