Cognizant Technology Solutions (NASDAQ:CTSH) recently announced that it has entered into an agreement to buy Indianapolis-based Lev, a privately-held digital marketing consulting firm in the United States for an undisclosed amount.
Lev provides strategic consulting, architecture design, technical optimization and application integration services. Businesses use Lev’s solutions to simplify and modernize their marketing campaigns. Notably, Lev is a Salesforce Platinum Partner, specialized in custom cloud solutions.
The deal will expand Cognizant’s Salesforce practice. Moreover, it adds to the customer base as Lev supports major brands in healthcare, life sciences, entertainment, technology, utilities, financial services and education among other industries.
Cognizant expects the deal to close in the first quarter of 2020, subject certain closing conditions.
Acquisitions to Aid Cognizant’s Growth
Acquisitions always played an important part in charting out Cognizant’s growth trajectory. The acquisitions are strengthening the company’s digital capabilities, client base and market footprint.
In February, the company announced its plan to buy French operations of EI-Technologies, a Paris-based, privately-held digital technology consulting firm and a leading independent Salesforce specialist in France. The transaction not only consolidates Cognizant’s Salesforce practice but also its European customer base.
In 2019, Cognizant completed five acquisitions, namely Mustache, Meritsoft, Samlink, Zenith and Contino, which expanded its footprint into SaaS, financial services including banking capabilities, biopharmaceutical and medical device space, enterprise DevOps and cloud transformation.
Acquisitions contributed $234 million in 2019 revenues that totalled $16.78 billion, up 4.1% over a year.
For 2020, Cognizant expects revenues to grow between 2% and 4% year over year at cc. Management also anticipates its top line to suffer a 60-bps headwind from the exit of certain content services business.
Zacks Rank & Stocks to Consider
Cognizant currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are Microsoft (NASDAQ:MSFT) , SAP SE (NYSE:SAP) and Garmin (NASDAQ:GRMN) , all three sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Microsoft, SAP and Garmin is currently pegged at 13.2%, 9.5% and 7.4% each.
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