Cognizant Tech Guides Up

The IT services company beats Street estimates and raises guidance.
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Cognizant Technology Services

(CTSH) - Get Report

pumped up its profit in the third quarter, and sales jumped 60% year over year, aided by growth in its health care, life sciences and financial services industry segments.

Shares added 64 cents in recent trading to $75.15.

The Indian IT services provider said Thursday that it earned $61 million, or 40 cents a share for the quarter, up from $40.6 million, or 28 cents a share in the same quarter last year.

On the top line, Cognizant reported earnings of $377.5 million, rising from $235.5 million in the same period a year ago.

That beat Thomson First Call estimates of 38 cents a share on sales of $366.6 million.

Excluding some items, the company earned 45 cents a share.

For the fourth quarter, Cognizant forecast revenue of at least $405 million and an EPS of 42 cents on a GAAP basis, and 47 cents on a non-GAAP basis.

The company also raised its outlook for the full year, with revenue expected to meet or surpass $1.405 billion. EPS is forecast at $1.51, or $1.68, excluding items.

Analysts were expecting earnings of 41 cents a share on sales of $391.5 million in the fourth quarter, and earnings of $1.47 a share on revenue of $1.37 billion for the full year.

Separately, the company said it would expand its infrastructure in India, spending more than $200 million through 2008 on land, construction and furnishing. Its facilities will grow by 3 million square feet and add capacity for more than 30,000 new employees.

Cognizant is planning to expand its facilities in Chennai, Coimbatore, Hyderabad, Kolkata and Pune, and construction will begin in the first quarter of 2007.

"Cognizant has grown faster than our competition over the last several years, and our strong pipeline reinforces our confidence in our future growth plans," CFO Gordon Coburn said in a statement.

"We expect our new construction program will enable us to meet growing customer demand in North America, Europe, South America and Asia," Coburn added.