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Why Cognizant Stock Jumped Today

By Evan Niu, CFA - Mar 24, 2020 at 2:48PM

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Cognizant is buying Lev to grow its Salesforce business. Meanwhile, the broader market jumped on stimulus hopes.

What happened

Shares of Cognizant Technology Solutions (CTSH 0.07%) have jumped today, up by 7% as of 1:50 p.m. EDT, after the company announced yesterday that it would acquire digital marketing agency Lev. The broader market is also significantly higher on hopes that the U.S. government will pass a stimulus bill to mitigate the economic impacts of the COVID-19 pandemic.

So what

Cognizant said that it would scoop up the smaller privately held digital marketing consultancy, which leverages Marketing Cloud to help companies improve marketing campaigns. The deal is expected to close in the first quarter, which ends in just a few days, and the tech company did not disclose any financial terms.

Cognizant Technology logo

Image source: Cognizant Technology.

"In this unprecedented time of uncertainty, we remain committed to our client and partner-focused strategy, investing in capabilities that help clients become fully digital, data-enabled, customer-centric organizations," Cognizant digital systems and technology exec Greg Hyttenrauch said in a statement. "We continue to significantly invest in cloud as one of our strategic priorities."

Now what

Lev is a Salesforce Platinum Partner and will be Cognizant's third acquisition related to its broader push to expand its Salesforce business. Last month, Cognizant acquired Code Zero and El Technologies, both of which are also Salesforce Platinum Partners. Cognizant had previously purchased SaaSfocus in 2018, another Salesforce consulting firm.

On its earnings call last month, Cognizant CEO Brian Humphries said the company's Salesforce business was "one of our most strategic and fastest-growing practices."

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