Activist investor Elliott Management sent a lengthy letter to Cognizant Technology Services (CTSH) on Monday, and less than 24 hours later the IT services company tied up a deal to buy digital marketing agency Mirabeau.

Elliott owns more than 4% of Cognizant and is one of the company's top four shareholders. The firm's investment is valued at about $1.4 billion.

On Monday, the activist fund detailed what it dubbed a three-part "value-enhancement plan" for Teaneck, NJ-based Cognizant in an open letter. The plan involves Cognizant taking on additional debt and instituting a $2.5 billion accelerated share repurchase program.

Additionally, Elliott pushed Cognizant to fund more research and development as well as complete more mergers and acquisitions.

The pressure comes because Elliott feels that Cognizant, despite being a leader in the IT services market, has shown a "deep underperformance across all relevant benchmarks, including its closest peers, over all time periods during the last five years."

Using Elliott's plan, however, Cognizant stock can jump to $80 to $90 per share by year's end 2017, the firm said. After gaining about 10% on Monday, Cognizant stock was down 2.12% to $55.74 late Tuesday afternoon. The shares are down about 7% year-to-date.

Cognizant issued a statement on Monday, saying that the company "welcomes open communications with all of its shareholders and values their input," adding that Cognizant has met with Elliott and will continue to review the agency's suggestion.

On Tuesday, less than 24 hours after Elliott sent its letter, Cognizant announced that it entered into an agreement to purchase Mirabeau, a privately-owned digital marketing and customer experience agency based in Amsterdam. The transaction will grow Cognizant's digital business capabilities in Europe.

The terms of the deal were not disclosed.

The deal was likely in Cognizant's pipeline for months, Wedbush analyst Moshe Katri said, and not impacted by Elliott's letter. Going forward, however, Katri expects Cognizant "to be disciplined and strategic, and not necessarily be driven by Elliott's proposals."

This could be a good thing, from Katri's perspective. Katri said in a note on Monday that while Elliott's suggestions for actions could improve the stock's performance in the near-term, "we believe such near-term stock gains will sacrifice the company's future outlook."

"We believe the actions outlined in the letter ignore the ongoing tsunami disrupting the IT Services sector (revenue cannibalization of legacy services, skill base reset into SMAC) and the subsequent actions needed for Cognizant to undertake in order to stay relevant competitively," Katri added, maintaining a "neutral" rating and $65 price target on Cognizant stock.

Oppenheimer's Glenn Greene, however, is more bullish on Elliott's strategy for Cognizant. "Following our review of the letter and conversations with Elliott, we find the recommendations to be generally reasonable, not heroic, and consistent with broader investor sentiment," Greene noted.

"We view the assumptions underlying Elliott's high-level model as reasonable and not aggressive," Greene added in an analyst note. The firm has an "outperform" rating and $68 price target on Cognizant stock.

Deutsche Bank analysts Bryan Keane, Ashish Sabadra, Korey Marcello and Mahesh Dass highlighted Elliott's call for a $2.5 billion accelerated share repurchase plan which, if implemented, "could serve as a signal to the market that the company is confident in its outlook."

The analysts added in a note that they agree with much of Elliott's suggestions, and "believe some small changes to CTSH's business model and capital allocation could drive significant multiple expansion." The firm has a "buy" rating and $69 price target on the shares.

Joseph Foresi of Cantor Fitzgerald added that the investors have been calling for the company to implement a capital allocation plan for some time, so Elliott's letter was "nothing new." He added that it would be a "welcome change," however, if Cognizant took heed, and maintained a "buy" rating and $67 price target on Cognizant stock.

Cognizant did not immediately respond to a request for additional comment.

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