The new chief executive of Cognizant Technology Solutions (CTSH) has embarked on an acquisition spree, most recently the purchase of Tin Roof Software, with good results so far, says a Bank of America report released Friday. Cognizant stock, meanwhile, has neared an entry point.
BofA analyst Jason Kupferberg pointed out tech veteran Brian Humphries took over as CEO in April 2019. The move came after Teaneck, N.J.-based Cognizant in 2017 shook up its board amid pressure from activist investor Elliott Management.
And thus far in 2020, the information technology services provider has acquired seven companies.
“We are bullish on this strategy of using more frequent tuck-in size deals, similar to the approach Accenture (ACN) has used for years,” Kupferberg said in a report to clients. “Ultimately these deals should accelerate CTSH’s organic growth.”
Kupferberg on Friday upgraded Cognizant stock to buy. Cognizant stock popped 4% to close at 68.18 on the stock market today.
Cognizant Stock Nears Entry Point
With the gain, Cognizant stock trades just below a cup-with-handle buy point of 69.59.
Kupferberg added, “Cognizant has grown its digital business from 33% of revenues in the first quarter of 2019 to 42% in Q2 2020, while digital bookings are up nearly 50% this year.”
Tin Roof Software specializes in enterprise software development. In addition, Cognizant expects the deal to close in the second half of 2020.
William Blair analyst Maggie Nolan in a recent report said Cognizant has focused on “digital offerings in cloud computing, artificial intelligence, analytics, digital engineering and the Internet of Things.
“We expect Cognizant will continue to invest in its digital portfolio and add depth to its offering through M&A,” she said.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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