Cognizant hit with downgrades by William Blair, BMO after weak Q3, guidance
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Cognizant Technology (NASDAQ:CTSH) shares fell more than 10% in premarket trading on Thursday as the IT services company reported third-quarter results that missed Wall Street expectations and offered guidance that prompted downgrades from multiple Wall Street banks.
William Blair analyst Maggie Nolan lowered the firm's rating on Cognizant Technology (CTSH) to market perform from outperform, noting that the third-quarter results "highlighted" where the company has continued to fall short in its execution phase after several years of turmoil and transformation. 
"The tight talent market and attrition were the main risks to the company's ability to capitalize on recent investments, and in the third quarter the mismanagement of talent came to a head," Nolan wrote in a note to clients. 
"We no longer have confidence that the company will accelerate top-line growth in the next 12 months as the churn in the employee base is likely to continue plaguing the company in 2023." 
BMO Capital analyst Keith Bachman lowered his rating on Cognizant Technology (CTSH) to market perform from outperform and cut the price target to $65 from $73, noting that 2023 is likely to be a "challenging year" for IT services and fulfillment coming off an uneven 2022.
"While the stock is inexpensive, we do not envision a near-term catalyst," Bachman wrote.
Earlier this month, Cognizant (CTSH) said it agreed to buy OneSource Virtual, a Workday partner based in Dallas, Texas.
Analysts are mostly cautious on Cognizant (CTSH). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a HOLD. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates CTSH a HOLD.