(Bloomberg) -- Cognizant Technology Solutions Corp. neared a dubious milestone on Friday after a disappointing forecast led at least nine analysts to cut their ratings on the stock, approaching the most downgrades in a single day this century.
The professional services company blamed the shortfall on continued softness in business from “a few of our largest banking clients” and a slowdown in its health-care segment. Cognizant now sees full-year revenue up 3.6 percent to 5.1 percent, down from a prior view of 7 percent to 9 percent. Its adjusted earnings per share view was lowered to a range of $3.87 to $3.95, down from a February projection of “at least $4.40.”
Wall Street bulls were quick to throw in the towel as eight buy-rated analysts trimmed their ratings to neutral, including Deutsche Bank, which wrote that it was “still confused on what happened during the qtr so suddenly.” JPMorgan cut its rating to underweight from neutral, saying “execution likely played a role” in the company’s first-quarter revenue miss as new Chief Executive Brian Humphries took the reins after the period ended.
With at least 33 analysts covering the stock on Wall Street, there could be more downgrades still to come for Cognizant. Ten would match the number of cuts Biogen Inc. received in March after a failed Alzheimer’s drug study cost the shares almost a third of their value. That was the biggest one-day reduction in sell-side projections for any S&P 500 company since 2000, according to data compiled by Bloomberg.
Cognizant sank 10 percent at 9:47 a.m. in New York, adding to a 7.7 percent decline late in Thursday’s session after the earnings report was released on the company’s website. The stock is trading at its lowest levels since late December.
(Updates number of downgrades in first and third paragraphs, shares in fifth.)
--With assistance from Brandon Kochkodin and Karen Lin.
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