Cognizant (NASDAQ:CTSH) has revealed its plans to acquire a private software consultancy and product development company, Devbridge. The financial terms of the transaction remain undisclosed so far.
The deal is expected to close by 2021-end, subject to satisfaction of closing conditions. As per the agreed terms, Devbridge employees will join Cognizant Softvision, a unit of Cognizant that develops custom digital products.
With this deal, Cognizant will be able to bolster software product engineering capabilities and deepen its global presence with the addition of 600 engineers, designers and product managers across Lithuania, Poland, the U.S., the U.K., and Canada.
To help clients with modern digital businesses, Cognizant has undergone acquisitions to expand capabilities such as digital engineering, data and artificial intelligence, cloud and Internet of Things. The company said to have invested $2.5 billion since 2019.
The Senior Vice-President and Chief Product Engineering Officer at Cognizant, Andres Angelani, said, “Devbridge’s talented team of product and engineering professionals deliver premium digital products, and we’re confident their expertise and experience will help our clients grow their business and their brand.”
“Cognizant Softvision and Devbridge both use a product-centric approach to create results for clients, and our culture, team structures, and company values are highly aligned,” said, Aurimas Adomavicius, the President of Devbridge.
Last month, Susquehanna analyst James Friedman reiterated a Buy rating on Cognizant with a price target of $100 (22.8% upside potential from current levels).
Friedman is of the opinion that the company’s strategies involve differentiated services, targeted verticals, and geographic expansion, whereas margins see steady growth.
The rest of the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 6 Buys, 2 Holds and 1 Sell. The average CTSH price target of $89.75 implies 10.2% upside potential to current levels.
Hedge Fund Trading Activity
TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Cognizant is currently Very Positive, as the cumulative change in holdings across all 13 hedge funds that were active in the last quarter was an increase of 2.5 million shares.