[T.S.R:14795] Initiating coverage on Cognizant Technology Solutions Corporation with a Moderate Outperform rating.

 

 

Cognizant has clearly got its game-plan right considering that it managed to deliver industry leading growth during the global economic crisis.  The company's confidence is evident from the fact that it recently raised the CY10 revenue growth guidance from 20% to 25%.  The demand revival in IT services has been faster than expected, and there is strong evidence of an increase discretionary spending Cognizant's front-end focused strategy (more than 20% of revenues are reinvested in SG&A expenses), its strong presence in the financial services and healthcare verticals, improved breadth of services with growing emphasis on BPO, KPO and infrastructure management and investments in new geographies will help the company sustain strong growth rates.  We initiate coverage with a Moderate Outperform rating.

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