Why Cognizant Technology Solutions Stock Was Slammed Friday

The consulting company's first-quarter results disappointed all around.

Daniel Sparks
Daniel Sparks
May 3, 2019 at 12:49PM
Technology and Telecom

What happened

Shares of consulting company Cognizant Technology Solutions (NASDAQ:CTSH) took a hit on Friday, falling as much as 13.4%. As of 12:20 p.m. EDT, the stock was down 10.7%.

The stock's decline follows Cognizant's first-quarter earnings release, which included worse-than-expected top- and bottom-line results. In addition, management lowered its outlook for the year.

A chalkboard sketch showing a stock price moving lower.

Image source: Getty Images.

So what

The company said first-quarter revenue rose 5.1% year over year to $4.11 billion. Non-GAAP earnings per share declined from $0.94 in the year-ago quarter to $0.91. On average, analysts were expecting revenue of $4.17 billion and non-GAAP earnings per share of $1.03.

"Cognizant's growth and performance in the quarter leaves room for improvement," said Cognizant CEO Brian Humphries in the company's first-quarter earnings release. "While I am encouraged by our client centricity, our employees' winning spirit and our innovation, we are not yet delivering against the market opportunity."


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Now what

Reflecting the company's underperformance during the quarter and revised expectations for slower growth in financial services and healthcare throughout 2019, Cognizant now expects full-year revenue to increase 3.6% to 5.1% year over year in constant currency. Previously, management expected constant-currency 2019 revenue to grow 7% to 9% year over year.