(Adds CEO comments, analyst quote, updates shares)
By Soham Chatterjee and Lehar Maan
Aug 6 IT services provider Cognizant Technology
Solutions Corp forecast its slowest full-year sales
growth in its 20-year history, citing delays in booking revenue
from some large deals.
Cognizant shares fell as much as 16.8 percent to $41.51 in
early trading on the Nasdaq, after the company cut its revenue
growth forecast for the year to "at least 14 percent" from 16.5
Longer-than-anticipated sales cycles for some large deals
had led the company to adopt a more conservative stance for the
rest of the year, Chief Executive Francisco D'Souza wrote in a
J.P.Morgan analyst Tien-tsin Huang downgraded the company's
stock to "neutral" from "overweight", citing the disappointing
cut in full-year revenue growth outlook in what is typically
Cognizant's seasonally strongest period of visibility and
Huang also cut his price target to $45 from $55.
"Clients aren't spending quite as much as we expected on
some projects," Cognizant President Gordon Coburn told Reuters.
Leadership changes at certain clients in North America and
the United Kingdom will result in the company getting less
revenue in 2014 than it previously expected, D'Souza said on a
Cognizant's latest full-year forecast translates to revenue
of at least $10.1 billion. Analysts were expecting full-year
revenue of $10.34 billion, according to Thomson Reuters I/B/E/S.
The company also forecast current-quarter revenue to range
between $2.55 billion and $2.58 billion, below the average
analyst estimate of $2.66 billion.
Cognizant provides services such as claims processing,
billing and call center operations to insurers, hospitals and
some state-run healthcare exchanges set up under President
Barack Obama's Affordable Care Act, also known as Obamacare.
For the second quarter, Cognizant's profit came in above the
average analyst estimate, helped by higher IT spending in North
America and Europe and growth in its healthcare business
Net income in the second quarter ended June 30 rose to
$371.9 million, or 61 cents per share, above analysts' average
estimate of a profit of 58 cents per share.
Revenue rose 16.5 percent to $2.52 billion, in line with
Cognizant's rivals Tata Consultancy Services Ltd
and Infosys Ltd reported better-than-expected profit
for the same period.
(Reporting by Soham Chatterjee, Supantha Mukherjee and Lehar
Maan in Bangalore; Editing by Simon Jennings and Saumyadeb