Tag Archives: acn

Accenture Survives Software Sag Of ’16; Stock Flirts With Record

Seemingly fully recovered from the infamous Software Sag of 2016 in January and February, big-cap Accenture ( ACN ) is flirting with a record-high stock price amid growth in its services, as it heads towards its fiscal Q2 earnings release due before the market open Thursday. Accenture stock was down a fraction in early trading in the stock market today , near 108, 18% above its seven-month low of 91.40 touched on Feb. 9 and just 2% off an all-time high of 109.86 set Oct. 28. Analysts polled by Thomson Reuters on average estimated Accenture earned $1.18 per share minus items for the quarter ended in February, up 9% from the year-earlier period, on revenue of $7.72 billion, down 2.6%. Accenture guided Q2 to $7.62 billion at the midpoint of its range. Dublin-based Accenture “cited no weakness in its financial services pipeline” during its Q1 earnings release on Dec. 17, wrote Cowen analyst Bryan Bergin in a recent research note. “This was (about) three weeks before a tumultuous start to 2016, and nearly two months prior to (services rival Cognizant Technology Solutions ( CTSH )) sounding warning bells in its banking and financial services vertical.” In the Cowen Feb. 25 research note, entitled “The Sky Does Not Appear to be Falling in Financial Services IT Spending,” Bergin wrote that “vendors that have noted service interruption have generally tied such weakness to a handful of specific clients. There have been Indian vendors with reports of healthy internal fiscal 2017 revenue growth targets, (notably Infosys ( INFY ) and Wipro ( WIT )) and positive industry demand narratives across investor days by ( Genpact ( G ), Epam Systems ( EPAM ) and Tata Consultancy Services) that have not yielded indications of across-the-board financials’ spending declines.” He noted that Accenture has grown revenue in financial services in constant currency in four of the last five quarters, although financial clients represent only 21% of Accenture revenue in the last 12 months. In a research note last week, Trefis applauded Accenture for a “very resilient business model,” with 45% of its business in outsourcing and 55% in consulting. Cowen rates Accenture stock at outperform, with a 115 price target. With a healthy IBD Composite Rating (CR) of 80, meaning its stock is outperforming 80% of S&P 500 issues in a variety of metrics, Accenture is worth about half of IBM ‘s ( IBM ) $142.8 billion in terms of market cap. IBM has a weak 56 CR. Infosys, with an 86 CR, has a $42.5 billion market cap, while Cognizant, with an 83 CR, is worth about $36.2 billion based on its stock price. Newly freed from PCs and printers, Hewlett Packard Enterprise ( HPE ) earns a 65 CR, with a $30.4 billion market cap. Slightly smaller Wipro carries a 68 CR, with $30.3 billion in market value. Those six companies comprise the largest members of IBD’s Computer-Tech Services industry group.

Cognizant ‘Throws Gas’ On Fire Burning Software Stocks

A big outsourcing company with a broad landscape, Cognizant Technology Solutions ( CTSH ) threw “gas on a bonfire” burning software stocks by warning of weakness in information technology for the banking and health care industries, said investment bank Evercore ISI. “Cognizant specifically highlighted a weakened demand environment in the financial services and health care sectors as key drivers behind disappointing” Q1 and 2016 guidance, Evercore ISI analyst Kirk Materne wrote in a research note Tuesday. Cognizant on Monday posted Q4 earnings that beat analysts, but it disappointed investors with guidance below Wall Street estimates, sending Cognizant stock down 7.7% Monday. And Cognizant stock was down another 3.3% in midday trading in the stock market today , at a 13-month low near 52. IT business process outsourcing (BPO) rivals  Infosys ( INFY ) and Accenture ( ACN ) were each down about 2% midday Tuesday. And IBM ( IBM ) stock was down more than 1.5% Tuesday. Its new IBM Watson Health is geared specifically to getting hospitals and medical practices migrating toward better electronic health records. Health care software vendor  Athenahealth ( ATHN ), which has been struggling near seven-month lows, was down 1%. “Rising medical costs, consumerization of health care and a changing regulatory environment, among other things, are driving industry consolidation in the payer industry,” said Cognizant President Gordon Coburn in the company’s earnings conference call with analysts. “We’re seeing some slowdown in our health care practice due to this consolidation, particularly in the early part of this year, as reflected in our Q1 guidance. “That said, we remain optimistic about the long-term opportunities within the payer segment and are quite encouraged by the large deal pipeline in this area for 2016. As the health care industry shifts from fee-for-service to value-based care models, health care organizations are simultaneously looking for new ways to deliver consumer-centric care while driving operational efficiencies.”

Cognizant Misses Q1 Guidance As Q4 EPS Beats; Xerox BPO Lurks

Highly rated business process outsourcing firm Cognizant Technology Solutions  gapped down 8% after the Monday stock market opening bell, shortly after management disappointed investors with guidance lower than Wall Street expected for the first quarter and 2016. Cognizant ( CTSH ) beat analysts estimates for Q4 earnings growth and came in short of analysts’ revenue expectations. Its stock fell as low as 53.46 early Monday in a rough market, 23% below its all-time high 69.80 reached Oct. 28. Shares were down 7% midday in the stock market today . Cognizant stock enjoys a high IBD Composite Rating of 90, meaning it’s performing better than 90% of stocks across a variety of metrics. That’s a hair better ranking than its larger business process outsourcing (BPO) rivals Infosys ( INFY ), somewhat better than  Accenture ( ACN ) and far better than IBM ( IBM ). Like Cognizant with huge operations in India, Infosys was down 5% at midday Monday. Accenture about 4.5% and IBM was off 1%. A new concern for BPO companies — not that they haven’t been competing already — is Xerox ‘s ( XRX ) BPO spin-off, announced just 10 days ago. Xerox has been offering outsourcing for years, but as a free-standing publicly traded company its BPO is likely to receive heightened attention in the market. Cognizant declines to discuss Xerox, a spokeswoman said. Xerox stock was down about 5% at midday. Cognizant said the current Q1 earnings per share should reach 78-80 cents on revenue of $3.18 billion to $3.24 billion. Analysts polled by Thomson Reuters thought Cognizant could do better on earnings, expecting adjusted EPS up 12% to 81 cents from 71 cents a year ago, on sales up 14% to $3.319 billion from $2.911 billion in Q1 2015. For Q4 2015, Cognizant said it earned 80 cents per share minus items, up 19.4% from 67 cents a year earlier, on revenue up 17.9% to $3.23 billion. Analysts polled by Thomson Reuters had on average been expecting 78-cents EPS minus items on $3.24 billion in revenue. “Our cash and investment balances, net of debt, grew by $1.5 billion during 2015 due to our strong business performance and strong cash flows,” said CFO Karen McLoughlin in Cognizant’s earnings release. She said Cognizant spent more than $375 million buying back stock in 2015, “reflecting our commitment to drive shareholder value.” Said President Gordon Coburn: “While digital opportunities significantly expand our addressable market, our rapidly growing consulting, infrastructure and business process services and geographic market expansion, continue to be solid drivers of demand for our services.” Cognizant and Infosys recovered in December from heavy flooding in Chennai, India, where they employ tens of thousands of workers.