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Cognizant Set to Buy Technology Consulting Firm Contino

Zacks Equity Research

Cognizant Technology Solutions CTSH recently announced that it has entered into an agreement to buy London-based Contino, a privately-held technology consulting firm, for an undisclosed amount.

The company expects the deal to close in the fourth quarter of 2019, subject to satisfaction of closing conditions and regulatory approvals.

Contino develops cloud platforms as well as advanced data and analytics platforms to help clients in their digital transformation efforts.

Notably, Adidas, Barclays, Dow Jones, Lloyds Bank, Vodafone and Morgan Stanley are some of Contino’s well-known clients.

Cognizant Technology Solutions Corporation Price and Consensus

Cognizant Technology Solutions Corporation Price and Consensus

Cognizant Technology Solutions Corporation price-consensus-chart | Cognizant Technology Solutions Corporation Quote

Contino to Boost Cognizant’s Portfolio

The acquisition is expected to enhance Cognizant's digital engineering processes to design and build customer-centric digital products. It is also expected to augment the company’s capabilities to establish a digital foundation for clients by redesigning technology and aligning them with enterprise strategy.

Contino’s global presence in the UK, the United States and Australia is expected to further expand Cognizant’s international presence.

Notably, Contino also offers DevOps solutions to streamline processes between software development and IT teams for its global 2000 clients.

Cognizant is, thus, expected to benefit from the growing global DevOps market, which, per a Research and Market report, is expected to be worth more than $8.4 billion by 2025.

Moreover, Cognizant’s digital offerings will expand given Contino’s strength in building cloud platforms and advanced data computational platforms.

Notably, Amazon’s AMZN cloud arm Amazon Web Services recognizes Contino as a premier partner. The company is also well-known among enterprises for its domain expertise related to Microsoft’s MSFT Azure and Alphabet’s GOOGL Google Cloud Platform.

Contino’s AWS relationship and experience with other leading cloud computing platforms is expected to further strengthen Cognizant’s ability in developing and deploying applications on cloud platforms.

Furthermore, Contino’s experience in modernization and automation of IT security services along with cloud security services will boost Cognizant’s portfolio.

Acquisitions to Aid Cognizant’s Growth

Acquisitions have played an important part in charting out Cognizant’s growth trajectory. Including the Contino acquisition, the company has acquired 14 companies since 2017, most of which are in the digital space.

The buyouts have not only strengthened the company’s digital capabilities but also boosted its clientele. Additionally, acquisitions have helped Cognizant expand in countries like Belgium, the Netherlands, Romania and Australia.

Zenith Technologies, Simlink and Meritsoft are some of its notable acquisitions to-date in 2019.

The buyout of Ireland-based Zenith Technologies is expected to expand the company’s footprint among healthcare organizations.

The acquisition of Finland-based IT management firm Simlink strengthened the company’s presence among banking customers globally, especially across the Nordics and Europe.

The acquisition of Meritsoft strengthened Cognizant’s SaaS portfolio and expanded its footprint among financial institutions. Notably, Dublin-based privately-held financial software company, Meritsoft’s FINBOS platform for post-trade processing, an automation solution for managing taxes, fees, commissions and cash flows, is popular among financial institutions.

However, sluggishness in technology vertical is expected to hurt top-line growth in the rest of 2019.

Zacks Rank

Cognizant currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

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