Cognizant Technology Solutions Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of IT services vendor Cognizant Technology Solutions (Nasdaq: CTSH  ) could use some help today, since they fell as much as 10.5% on very heavy trading volume.

So what: Cognizant's just-reported first quarter beat Street targets and drew rave reviews from analysts. However, rival Computer Sciences (NYSE: CSC  ) just warned investors of weak sales and earnings, which gave that stock a 13% haircut.

Now what: Mr. Market seems to be taking Computer Sciences' weakness as a bad omen for the IT consulting sector in general. From giant Cognizant to little Syntel (Nasdaq: SYNT  ) , stocks are swooning all over the place with little to blame but that one pessimistic report. But I think it's a big mistake, because Computer Sciences' weakness stems from a resigned government contract with lower margins plus a higher tax rate. Does that sound like a sector problem to you?

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