Cognizant Tech Beats Estimates

The company's stock surges after strong results.
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Cognizant Technology Solutions

(CTSH) - Get Report

sailed past earnings and revenue estimates for its first quarter on Wednesday, and provided guidance suggesting that there is more growth to come.

The stock jumped 10.9%, or $6.67, to $67.73 in morning trading.

Cognizant said it earned $47.2 million, or 32 cents a share, for the quarter, rising from $32 million, or 22 cents a share, a year earlier.

Excluding certain items like stock-based compensation, Cognizant made $53.6 million, or 36 cents a share.

On the top line, the IT services company raked in $285.5 million, up 57% from $181.7 million in the parallel quarter last year.

Consensus estimates from Thomson First Call had forecast the company to make 29 cents a share on sales of $276.6 million. Analysts include the impact of stock-based compensation in their estimates.

"We are pleased with our outstanding financial performance during the quarter and our strong start to 2006," Lakshmi Narayanan, president and CEO of Cognizant, said in a statement. "Our first quarter results were driven by escalating demand for our integrated set of services across our entire range of industry verticals.

"We experienced strong growth in our newer verticals, especially media and telecommunications, and strengthened our leadership positions in financial services, healthcare and life sciences, stemming from our continued investment in building deep relationships with our customers," Narayanan added.

Cognizant also raised its second-quarter and full-year guidance. Now, revenue is expected to be $317 million at minimum for the quarter, GAAP EPS is anticipated to be 33 cents, and non-GAAP EPS, excluding stock-based compensation, will be 36 cents.

For the second, or current, quarter, the First Call consensus pegs Cognizant to earn 32 cents a share on revenue of $306.7 million.

Fiscal 2006 revenue will be at least $1.3 billion, the company said. Cognizant should earn $1.37 a share, and excluding stock-based compensation expense, $1.52 a share.

For the full year, EPS estimates total $1.33 a share, and revenue of $1.28 billion.