Cognizant's potential FCPA violations makes stock 'univestable' to many investors--analyst
Share of Cognizant Technology Solutions Corp. plunged 14% in active trade Friday, toward the lowest close since October 2014, after the company's investigation into potential violations of the Foreign Corrupt Practices Act prompted a downgraded at Citigroup. Volume was 48.3 million shares, about 11 times the full-day average. Analyst Ashwin Shirvaikar cut his rating to neutral, after being at buy for at least the last three years, and slashed his stock price target to $55 from $68. Shirvaikar said that while it is too early to know the specifics of the investigation, the possible violations appear to be quite serious, especially since President Gordon Coburn, who Shirvaikar called the "long-time face of the company," resigned. While the stock's valuation remains "attractive," given the information technology consulting company's fundamental strength, "we also recognize that the stock is likely 'uninvestable' to many investors now due to the combination of near-term factors that serve as an overhang," Shirvaikar wrote in a note to clients. The stock had tumbled 21% year to date, while the S&P 500 has gained 6.4%.
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