Cognizant’s 2Q results, forecast top estimates on strong demand; shares surge

Cognizant’s 2Q results top forecasts; shares surge

TEANECK, N.J. — Cognizant Technology Solutions Corp., which provides consulting and information technology outsourcing, booked a 22 percent jump in net income Tuesday, benefiting from a surge of pent up demand.

The results, as well as Cognizant’s forecast for the rest of the year, topped Wall Street forecasts and sent the company’s shares up nearly 10 percent in morning trading.

“For the last two years, clients have underinvested in their businesses, particularly in technology,” Cognizant CEO Francisco D’Souza said in an interview. “Now, as economies around the world stabilize and clients start to focus on growth, many of those projects that were put on the back burner are starting to kick off.”

Still, D’Souza said the company is not counting on strong economic growth in the second half of the year.

Even though Cognizant raised its full-year revenue forecast, D’Souza said the company is expecting economic conditions to stay roughly the same. “The economic recovery is still tentative,” he said.

Cognizant earned $172.2 million, or 56 cents per share, in the three months ended June 30.

That’s up from $141.3 million, or 47 cents per share, a year ago and better than the 52 cents per share analysts expected, according to Thomson Reuters.

Revenue jumped 42 percent to $1.11 billion, beating the average forecast of $1.02 billion.

The company’s forecast for the quarter ending in September was equally upbeat. It expects earnings of at least 59 cents per share and revenue of $1.18 billion, while analysts were looking for 54 cents per share on $1.06 billion.

For the full year, Cognizant raised its forecast. The company said earnings should come to at least $2.26 per share with revenue of at least $4.46 billion. That’s up from a previous estimate of at least $2.10 per share and revenue of at least $4.1 billion.

The average forecast called for $2.13 per share $4.14 billion.

Cognizant shares surged $5.44, or 9.8 percent, to $60.86.