CTSH: Lean Buy. DCF P(above)=100%, FV=$116 vs price $61. Analyst target $88 (+45%). 13x PE near historic lows. IT services with stable recurring revenue. Missing: no specific near-term catalyst identified — Gen AI services transition could be headwind or tailwind depending on execution.
Fair Value Distribution — percentile bands
100.0% of simulations place fair value above current price
WHAT IS PRICED IN
Revenue-Based Reverse DCF
-7.2%/yr
±2.9% · revenue growth to justify current price
FCF-Based Reverse DCF
-6.1%/yr
±2.4% · FCF growth to justify current price
THE GAP
Market pricing margin compression or rising capex
KEY VALUE DRIVERS
Spearman correlation — what moves this valuation most
AI transformation drives multi-year outsourcing demand; India cost moat; undervalued vs peers.
Visa restrictions hurt India delivery; AI automates services reducing headcount needs.
Clients bring IT in-house via AI; visa policy tightens further.
Updated Mar 30
CTSH delivered solid operational execution in FY2025 with 7% organic revenue growth, 140bps margin expansion, and improving attrition. Core segments (HS, FS) strong; CMT weakness concerning. Tax charg...