Cognizant Technology Solutions Corp. (CTSH) recently acquired digital marketing service provider Cadient Group. Per the Economic Times, which quoted a Cognizant spokesperson, the company shelled out approximately $30 million for Cadient.
Pennsylvania-based Cadient’s clientele includes pharmaceutical, biotechnology and medical devices firms as well as hospitals, health care systems and related institutions and associations.
Cadient’s core technology focuses on brand planning, content development and multichannel analytics. The company also offers digital, social and mobile marketing solutions.
The latest acquisition expands Cognizant’s digital marketing capabilities in the healthcare and life sciences business segment, which accounts for approximately $2.5 billion in annual revenues. The deal will also strengthen Cognizant’s technology staff bench, adding more than 100 digital marketing specialists to it.
In terms of intellectual property, Cognizant’s product portfolio will integrate Cadient Group’s insights and analytics platform Reveal, the experiential marketing platform Immerse and OneVoice, an advocacy campaign management platform.
Cognizant recently announced that it is acquiring the privately held healthcare information technology (IT) solutions provider, Trizetto, for $2.7 billion in cash. Two back-to-back acquisitions of Trizetto and Cadient suggest that the company is pursuing the inorganic route for expansion in the healthcare market.
Cognizant already serves 28 of the top 30 global pharmaceutical companies, 16 of the top 20 health plans in the U.S., 4 of the top 5 pharmacy benefit management companies in the US, 9 of the top 10 biotech companies,9 and 12 of the top 15 medical device companies worldwide.
The recent acquisitions will further expand Cognizant’s addressable market. The Trizetto takeover will provide a significant boost to the company’s top line growth, going forward. It will help Cognizant to cash in on the future prospects of the health care industry, which currently accounts for nearly 17% of U.S. gross domestic product (GDP).
We believe that Cognizant, which competes with the likes of Accenture (ACN), Infosys (INFY) and Wipro Ltd. (WIT), remains well diversified in key verticals and emerging markets of social, mobile, analytics and cloud. These will continue to boost its top line.
Moreover, the company’s expanded share buyback program reflects strong liquidity, which will further boost investors’ confidence in the near term. However, sluggish growth expectations for the second half of 2014 will remain an overhang on the stock.
Currently, Cognizant has a Zacks Rank #2 (Buy).
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