To boost its presence in northern Europe, Cognizant Technology Solutions Corporation (CTSH - Analyst Report) has announced the acquisition of Norway-based IT solutions provider, Frontica Business Solutions for nearly $128 million.
Reportedly, Frontica had backlog worth 5.1 billion Norwegian Krone at the end of its last reported quarter driven by important agreements with its key clientele. Frontica is a subsidiary of Norwegian oil investment services company, Akastor ASA.
In a statement, Cognizant’s President, Global Growth Markets, stated “The acquisition helps us strengthen our oil and gas industry expertise, expand our presence in key markets, and deepen and broaden our service portfolio for our clients. Frontica will play a key role in helping us realize these benefits through their specialized capabilities in serving the oil and gas industry.”
Acquisitions have been a key growth catalyst for Cognizant. In January this year, Cognizant acquired KBACE Technologies, which specializes in cloud strategy, implementation and integration. It will aid in expanding the company’s advanced IT capabilities, especially for Cloud and SaaS offerings. Also, it bought a 49% stake in ReD Associates that specializes in understanding customer behavioral pattern and applying the same to business strategy. Recently, the company also declared its plans to acquire Idea Couture, which will be integrated with Cognizant Digital Works.
Earlier, the company completed the acquisitions of TriZetto, iTask, Cadient, Odyssey and itaas. The company has not only gained new customers from these buyouts but also expanded its capabilities in the healthcare industry and enhanced its overall digital delivery capabilities. Among these, TriZetto happens to be Cognizant’s largest acquisition to-date. The company spent $2.8 billion to acquire the healthcare IT solutions provider to develop, license, implement and support proprietary and third-party software products for the healthcare industry. Currently, the combined entity generates more than $3 billion in revenues from the healthcare sector.
The news of the Frontica acquisition comes on the heels of an ongoing corruption probe. Last week, the company said that it was carrying out an internal investigation, related to a possible infringement of US Foreign Corrupt Practices Act with regard to charges of bribery in its Indian operations.
The company appointed Rajeev Mehta as its President. Mehta replaces Gordon Coburn. Though media reports suggest that the departure of Coburn is linked to the ongoing corruption probe, the company refrained from commenting over this.
At present, Cognizant carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include SYNNEX Corp. (SNX - Snapshot Report) , Asure Software, Inc. (ASUR - Snapshot Report) and LightInTheBox Holding Co., Ltd. (LITB - Snapshot Report) . All three sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings per share estimates for SYNNEX Corp, Asure Software and LightInTheBox have improved over the last 30 days. For the current year, estimates for SYNNEX Corp have gone up to $6.49 from $6.22 while for Asure Software, estimates have gone up from 15 cents to 19 cents. For LightInTheBox, the loss estimate has narrowed from 18 cents to a loss of 7 cents.
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