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A Goldman Sachs note helped bump up

Cognizant Technology


shares and drag

Satyam Computer


down a few notches.

Goldman Sachs analyst Julio Quinteros recommended that investors swap the two stocks, writing that Cognizant is his top offshore IT-services pick because it "provides the best combination of growth and upside potential among the offshore companies."

He raised his rating on Cognizant to outperform/attractive, and upped his calendar-year 2007 revenue estimate to $1.81 billion from $1.80 billion. The revised forecast accounts for the company's "high exposure to applications development, increased exposure to ERP/package work and successful execution in ramping up new and strategic accounts." He also raised his earnings prediction from $1.91 to $1.95 a share for the year.

He believes Cognizant offers 20% to 30% upside, compared to about 10 % upside for Satyam.

Shares of Cognizant climbed 4.5% in recent trading, adding $2.56 to total $59.44.

Meanwhile, Satyam's stock fell 3.5%, or $1.31, to $35.97, and Quinteros lowered Satyam's rating to in-line/attractive.

"Although Satyam still offers some upside, we believe that the Cognizant investment opportunity will be more compelling given its fundamental growth profile and defensive qualities," Quinteros wrote. "We note that Cognizant operates at a "steady state" operating margin of 18 % (including ESOs

employee stock ownership vs. 22% to 23% for its industry peers."

Goldman has an investment banking relationship with Cognizant and owns Satyam shares.