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Cognizant (CTSH) to Report Q3 Earnings: What's in Store?

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Cognizant Technology Solutions (CTSH - Free Report) is set to report third-quarter 2021 results on Oct 27.

Third-quarter 2021 revenues are expected to be in the range of $4.69-4.74 billion, indicating growth of 10%-11% on a cc basis. The Zacks Consensus Estimate for revenues is currently pegged at $4.73 billion, indicating an increase of 11.3% from the figure reported in the year-ago quarter.

The consensus mark for third-quarter earnings has remained unchanged at $1.05 per share over the past 30 days, indicating year-over-year growth of 8.2%.

Notably, the company beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, the average negative surprise being 2.87%.

Let’s see how things have shaped up prior to the upcoming announcement.

Factors to Consider

Cognizant’s third-quarter 2021 performance is expected to have benefited from its domain expertise in areas like automation, digital engineering, cloud and IoT. Increasing digital transformation efforts across enterprises are anticipated to have fueled growth in the company’s digital bookings.

The steady adoption of digital engineering, cloud infrastructure, IoT, AI and analytics solutions is expected to have driven the company’s product and resource revenues during the to-be-reported quarter.

The company’s expanding partner base, which includes Salesforce (CRM - Free Report) , Workday (WDAY - Free Report) , Oracle (ORCL - Free Report) , SAP and ServiceNow, is likely to have helped it provide a complete suite of enterprise application services, thereby aiding client wins during the September-end quarter.

On Aug 17, Cognizant announced that it acquired the digital engineering assets from Hunter Technical Resources, a privately-held digital engineering and project management agency headquartered in Atlanta, GA.

Moreover, in the to-be reported quarter, Cognizant acquired TQS Integration, a privately owned global industrial data and intelligence company based in Lismore, Ireland.

Besides, the company pursued several acquisitions, including Servian, Magenic Technologies, Linium, Bright Wolf and Tin Roof Software, to strengthen its digital capabilities, which are likely to have been a major positive during the quarter in review.

Additionally, rising demand for digital operations and cloud-based environments is likely to have aided Life Sciences in the to-be-reported quarter. Also, strong demand from biopharma customers, along with contribution from Zenith’s acquisition, is likely to have aided the top line in the healthcare segment.

Communications, Media and Technology segment is likely to have benefited from steady demand for digital engineering services.

However, this Zacks Rank #4 (Sell) company’s top-line results might underline the negative impact of the exit from certain portions of the content services business, and prevalent pressure in media and entertainment.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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