CTSH · Cognizant Technology Solutions
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $73.72
Note written ·
Price against the kill line
14.5% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $73.72, on record since 11 November 2026. The shares are up 12.5% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $73.72, the highest close of the last 20 sessions (22 October 2026), would show the shares leading the S&P 500. So would fourth-quarter revenue above the $5.57 billion top of the guided range.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 30 September 2026, filed 29 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 5,664
- Revenue, change on a year (%)
- +4.6
- Gross margin (%)
- 33.8
- Operating margin (%)
- 15.4
- Free cash flow, four quarters ($M)
- 2,363
- Net cash, cash less debt ($M)
- 0.0
- Price to earnings (×)
- 10.9
- Enterprise value to sales (×)
- 1.3
All filed numbers
What Cognizant Technology Solutions reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 5,664 | +4.6 | 33.8 | 15.4 |
| first filed | 5,481 | +4.5 | 33.4 | 15.9 |
| first filed | 5,413 | +5.8 | 32.8 | 15.6 |
| first filed | 5,333 | +4.9 | 33.7 | 16.0 |
| first filed | 5,415 | +7.4 | 33.9 | 16.0 |
| first filed | 5,245 | +8.1 | 33.7 | 15.6 |
| Pre-tax income ($M) | 863 |
| Net income ($M) four quarters: 2,573 | 627 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | −7.6 |
| Operating cash flow ($M) | 2,694 |
| Capital spending ($M) | 331 |
| Free cash flow ($M) | 2,363 |
| Cash and short-term investments ($M) | 1,552 |
| Debt ($M) non-current long-term debt plus short-term borrowings | 1,552 |
| Net cash, cash less debt ($M) | 0.0 |
| Deferred revenue ($M) +6.0% on a year | 444 |
| Backlog, orders not yet delivered ($M) +0.1% on a year | 6,224 |
| Receivables ($M) | 4,850 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 14,726 |
| Market value ($M) | 28,167 |
| Enterprise value, market value plus net debt ($M) | 28,167 |
| Enterprise value to sales (×) | 1.3 |
| Enterprise value to operating income (×) | 8.2 |
| Price to earnings (×) | 10.9 |
| Price to book value (×) | 1.9 |
| Free-cash-flow yield (%) | 8.4 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 6.6% of shares outstanding sold short, 4.4 days of average trading to cover, −11.3% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $184K |
| 12 monthsfrom | $210K | $6.1M |
The thesis
Cognizant's shares are more likely to lag the S&P 500 over the next three months, because new-order bookings fell 7% in the third quarter and fourth-quarter revenue guidance came in below analysts' estimates. The fourth-quarter report, expected around early February 2027, settles whether orders stop falling and whether the artificial-intelligence (AI) services push reaches reported numbers.
Cognizant reported third-quarter revenue of $5.664 billion on 29 October 2026, up 4.6% from a year earlier and inside its own $5.600–$5.680 billion range. Benzinga cited a $5.645 billion estimate. Adjusted earnings per share were $1.49 against a $1.47 estimate. Trailing-twelve-month bookings were $28.7 billion, up 4% (company results release).
The shares closed at $64.43 on 11 November 2026, 26.0% below the 52-week intraday high of $87.03 set on 14 January 2026. They are 9.3% higher over three months. Since the report, Cognizant has announced the completion of the Wizeline acquisition (press release dated 6 November 2026) and a Claude Frontier Capability Group of more than 25,000 professionals (10 November 2026). Neither release states a revenue figure.
Bullish and bearish views on Cognizant Technology Solutions Corporation
The bull case on Cognizant Technology Solutions Corporation (CTSH), in brief: the quarter beat on revenue and profit. The bear case: fourth-quarter guidance is light.
Bull case
- The quarter beat on revenue and profit. Revenue of $5.664 billion and adjusted earnings per share of $1.49 both topped Benzinga's cited estimates (29 October 2026). Adjusted operating margin rose 30 basis points to 16.3%.
- Financial services is growing quickly. Financial services revenue grew about 12% year over year in the third quarter, per the results release and trade press (29 October 2026). Health sciences and products and resources each slipped by less than 1%.
- The restructuring bill came down. On 29 October 2026 Cognizant cut its total expected Project Leap cost to $180–$250 million and said it expects about $200 million of in-year 2026 savings. Third-quarter charges were $51 million.
- Full-year earnings guidance tightened. Adjusted earnings per share guidance was narrowed to $5.72–$5.79 from $5.70–$5.82 (Benzinga, 29 October 2026), against a $5.76 estimate. The full-year revenue floor rose to $22.05 billion from $22.040 billion.
- AI delivery capacity is being built. Cognizant announced the Claude Frontier Capability Group (10 November 2026) and completed the purchase of Wizeline (announced 6 November 2026). On 12 November 2026 its AI Lab joined a global initiative for an open agentic web, according to company news.
- Buybacks continue. Cognizant repurchased 4.9 million shares for $258 million in the third quarter and has $2.1 billion left under its authorization (29 October 2026).
Bear case
- Fourth-quarter guidance is light. Cognizant guided fourth-quarter sales to $5.49–$5.57 billion against a $5.651 billion estimate, and cut the top of its full-year range to $22.14 billion from $22.350 billion (Benzinga, 29 October 2026). Full-year constant-currency growth is now guided at 4.0% to 4.4%.
- New orders are shrinking. Third-quarter bookings fell 7% year over year after a 6% fall in the second quarter (company results releases, 29 July 2026 and 29 October 2026). Bookings lead revenue, so two straight declines point to slower growth ahead.
- Cash generation is lower this year. Free cash flow was $1,582 million for the first nine months of 2026, against $1,884 million a year earlier (results release, 29 October 2026).
- Analysts are cautious. After the report, Morgan Stanley kept Equal-Weight with a $68 target and RBC kept Sector Perform with a $55 target (Benzinga, 30 October 2026).
- Legal and restructuring noise has grown. A lawsuit over Google Maps driver classification was filed against Cognizant on 3 November 2026, per company-news headlines. Headcount was 359,900 on 30 September 2026, up 10,100 from a year earlier, while Project Leap cuts proceed.
- The AI claim is not in reported numbers. The Wizeline, Claude and open-agentic-web announcements since 6 November 2026 carry no contract values or purchase price. Third-quarter growth of 4.6% compares with 4.5% in the second quarter.
Price setup
On adjusted daily closes, the shares ended at $64.43 on 11 November 2026. That is above the 50-day average of $62.48 and the 200-day average of $57.76. The 52-week closing low was $38.73 on 30 June 2026.
The shares closed at $66.54 on 5 November 2026 and $65.00 on 10 November 2026. They have stayed in a narrow band since the report. On 29 October 2026 Benzinga reported them down about 5.5% intraday to $62.70 as the guidance landed, and part of that fall has been recovered.
The late-October rally to the highest close of the last 20 sessions (22 October 2026) came on heavy volume, 9.93 million shares against a 6.46 million average (MarketBeat). Yahoo Finance tied that move to money rotating into IT services from chip and AI stocks, not to company news. The shares have not regained that close since the report.
The market has priced a recovery from the June low and a stable outlook, but not an acceleration. The shares remain 26.0% below the January high while bookings are falling and the next revenue guide is below consensus.
Catalysts ahead
- ~4 February 2027 (est.): Fourth-quarter and full-year 2026 results. Tests the $5.49–$5.57 billion guided revenue range and whether in-period bookings stop falling.
What would change the view
A daily close above $73.72, the highest close of the last 20 sessions (22 October 2026), would show the shares leading the S&P 500. So would fourth-quarter revenue above the $5.57 billion top of the guided range.
What it trades with
Cognizant trades with Indian-heritage IT services peers and with Accenture, whose 1 October 2026 report (fiscal fourth-quarter revenue of $18.68 billion, fiscal 2027 growth guidance of 3% to 6% in local currency) moved the group. It also moves with rotation between IT services and AI hardware stocks, which Yahoo Finance cited for the October jump. The Nasdaq 100 chip sell-off in late July was the same cross-current in the other direction.
The evidence, claim by claim (8)
- Third-quarter 2026 revenue was $5.664 billion, up 4.6% year over year; adjusted EPS was $1.49; trailing-twelve-month bookings were $28.7 billion, up 4%, while third-quarter bookings fell 7%. Cognizant third-quarter 2026 results release · as of
- Cognizant guided fourth-quarter sales to $5.49–$5.57 billion against a $5.651 billion estimate, and narrowed full-year adjusted EPS guidance to $5.72–$5.79. Benzinga guidance report · as of
- Project Leap restructuring cost estimate cut to $180–$250 million; third-quarter charges were $51 million. Cognizant third-quarter 2026 results release · as of
- Cognizant repurchased 4.9 million shares for $258 million in the third quarter; $2.1 billion remains under the authorization; headcount was 359,900. Cognizant third-quarter 2026 results release · as of
- Free cash flow was $1,582 million for the first nine months of 2026 versus $1,884 million a year earlier. Cognizant third-quarter 2026 results release · as of
- Morgan Stanley kept Equal-Weight with a $68 target and RBC kept Sector Perform with a $55 target after the third-quarter report. Benzinga analyst-action reports · as of
- Cognizant announced completion of its acquisition of Wizeline, an AI-native digital engineering firm; financial terms were not disclosed. Cognizant press release · as of
- Cognizant announced a Claude Frontier Capability Group of more than 25,000 professionals for global Claude delivery, with a managed-services model. Cognizant press release · as of
Sources
- Cognizant Reports Third Quarter 2026 Results · finviz.com ·
- Cognizant records 4.6% rise in revenue in Q3 but lowers annual growth guidance · yourstory.com
- Cognizant trims growth to 4% to 4.4% despite $5.7B quarter · newsbytesapp.com
- Staffing Industry Analysts
- Cognizant Completes Acquisition of Wizeline · finviz.com
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