Shares of Cognizant Technology Solutions (CTSH) tumbled 12.8% to $58.09 Friday after the information technology services company missed Wall Street's first-quarter earnings expectations and cut its full-year outlook.
The Teaneck, New Jersey-based company said net income was $441 million compared with $520 million a year ago. Adjusted earnings came to 91 cents a share, down from 94 cents a share a year ago, and missing analysts' forecasts of $1.03 a share. Revenue totaled $4.11 billion, missing analyst forecasts of $4.17 billion.
Cognizant said it expects current-quarter revenue in the range of $4.16 billion and $4.20 billion, short of Wall Street's call for $4.29 billion in revenue.
Cognizant said it now sees full-year revenue up 3.6% to 5.1%, down from an earlier forecast of 7% to 9%. Adjusted earnings was reduced to a range of $3.87 to $3.95, down from February's guidance of at least $4.40.
"Our revised full-year outlook reflects the first-quarter underperformance and expectations of slower growth in Financial Services and Healthcare for the remainder of 2019," CFO Karen McLoughlin said in a statement.
Several analysts reduced their ratings on the company, including Wedbush's Moshe Katri, who downgraded Cognizant to neutral from outperform and lowered the price target to $70 from $80 a share. Shares were also taken off the firm's Best Ideas List. Katri said in a note to investors that the downgrade reflects the first quarter miss and new CEO Brian Humphries' decision to "essentially walk away" from the company's financial targets from November 2018, which were provided during Cognizant's first investor event.
Humphries, speaking in his first conference call since coming on board April 1, said "we had a disappointing first quarter performance."
"We have a lot of work to do to get back to what I believe this company is capable of achieving to seize the market opportunity in front of us," he said.