Needham shrugged off two key events reported by Cognizant Technology Solutions Corp CTSH that impacted shares Friday. The firm thinks that the appointment of President following the resignation and internal prob, would not alter the forward-looking view on the stock.
Therefore, analysts maintained their Buy rating and $68 target price.
While viewing Gordon Coburn resignation as President as a sudden development, the brokerage thinks Rajeev Mehta filling the void would enable Cognizant ensure smooth transition. Therefore, the firm doesn't see any significant disruption in the operation.
Needham thinks Cognizant notified the regulators about its internal investigation and isn't sure about the implications from operational and legal perspective. However, investors need to monitor the situation and watch out for any details in the upcoming earnings conference call or otherwise.
In a note, analysts said, "Given the early stage and scarcity of detail on the payments investigation, it does not currently alter our forward-looking view of the stock, but we will continue to monitor the situation. We attribute the fall in the stock today more to the investigation than the resignation itself, though investors may be concerned that the two events are related."
At time of writing, the stock traded down by $8.01, or 14.56 percent, to $46.99.
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