Business Services Software "Weekly Payroll Pulse & Technology Tally" McVeigh

Research evidence excerpt

Business Services Software "Weekly Payroll Pulse & Technology Tally" McVeigh

Valuation Method and Risk Statement

Our price target for Cognizant is based on PE multiples on forecast earnings. A better-than-

expected cyclical demand recovery could result in near-term revenue spikes, which could lead

to upside in our estimates. Any weakness in the Indian rupee could mean upside risks to

margins and earnings estimates. A sharp decline in IT services spending could result in

downward revisions to our earnings estimates. Technology sector investing involves a high

degree of risk. Rapid technological changes, increasing competition and exposure to

macroeconomic cycles are among the many risks faced by investors of technology stocks.

Moreover, it is extremely difficult to project the financial results of tech companies since their

operating models are highly volatile and unpredictable. Finally, valuing tech stocks can prove

challenging because neither traditional nor non-traditional valuation measures have provided

much insight into how these stocks trade.

PCTY: Price target derived from EV/Sales on our 2026E. Price target based on a 2-year multiple

on FY26 estimates, rolled forward by Cost of Equity to derive our 12-month price target.

Upside risks include: (1) better-than-expected sales productivity; (2) continued strength in

SMB labor; (3) greater churn to PCTY. Downside risks include: (1) competition from

incumbent and SaaS- based HCM; (2) external macro shocks; and (3) risk from future upsell

opportunity, as most ofPaylocity's revenue growth has historically been new logo driven.

SSNC: Our price target is based on a target PE multiple relative to the local market and

historical multiples. Risks for SSNC include: 1) a large exposure to the hedge fund market,