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NEW YORK (AP) — Shares of Cognizant Technology Solutions Corp. rose Wednesday after the information technology company disclosed its compensation targets for 2013, giving Wall Street a look at Cognizant's business expectations.
THE SPARK: Cognizant disclosed the status of performance units granted to executives including CEO Francisco D'Souza and President Gordon Coburn. The units will vest only if Cognizant reaches specific revenue targets.
According to a filing with the Securities and Exchange Commission, none of the options will vest unless the company reaches more than $8.22 billion in revenue in 2013. All of the options will vest if its revenue reaches $8.52 billion, and the compensation will double if its revenue reaches $9.18 billion.
Analysts expect the Teaneck, N.J., company to report $8.6 billion in 2013 revenue, on average. The analyst estimates range from $8.3 billion to $8.89 billion.
THE BIG PICTURE: Cognizant provides information technology, consulting and business processing outsourcing services to financial institutions. The company reported $6.12 billion in revenue in 2011 and expects at least $7.34 billion this year.
THE ANALYSIS: Jefferies & Co. analyst Jason Kupferberg said the disclosure suggests the company is expecting about $8.52 billion in revenue in 2013 because Cognizant's guidance is usually similar to the 100 percent vesting target. Kupferberg said Cognizant will issue its 2013 guidance in February, and the compensation target suggests the company is expecting slightly better growth than Wall Street had anticipated.
The analyst maintained a "Buy" rating on Cognizant stock with a price target of $80 per share.
SHARE ACTION: Cognizant Technology Solutions stock picked up $2.84, or 4.2 percent, to $69.98 in afternoon trading. The shares have gained 16 percent since the company reported its second-quarter results on Aug. 6.