(Adds CEO comments, analyst quote, updates shares)
By Soham Chatterjee and Lehar Maan
Aug 6 (Reuters) - 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 percent.
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 statement.
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 growth.
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 conference call.
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 division.
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 analysts’ expectations.
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 Chakrabarty