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Nov 6 (Reuters) - Software development services provider Cognizant Technology Solutions Corp (CTSH.O) posted higher third-quarter earnings but guided fourth-quarter revenue below expectations, sending shares down as much as 21 percent to a new year low.
Goldman Sachs analyst Julio Quinteros removed the company from the Americas Conviction Buy List and said the shares would likely be challenged by questions about the U.S. macro backdrop and exposure to the financial services vertical into 2008.
The company posted third-quarter earnings of $96.2 million, or 32 cents a share, compared with $61.0 million, or 20 cents a share, in the year-ago period. Revenue rose 48 percent to $558.8 million.
Analysts on average were expecting earnings of 29 cents a share, on revenue of $556 million for the quarter, according to Reuters Estimates.
For the fourth quarter, Cognizant forecast earnings of 31 cents a share on revenue of $590 million to $595 million. Analysts were expecting earnings of 31 cents a share and revenue of $597.2 million.
For 2007, Cognizant forecast earnings of $1.14 a share, compared with its prior view of at least $2.20, reflecting a 2-for-1 stock split in October.
The company raised its revenue forecast for 2007 to $2.125 billion to $2.13 billion, from its prior view of at least $2.11 billion.
Goldman's Quinteros, who retained a "buy" rating on the stock, said the shares will not likely get the boost that he was looking for into the end of the year as the revised outlook is only in line with his estimates.
He noted that the shares have risen 0.7 percent compared to the S&P 500 which was down 1.4 percent since the stock was added to the List on May 22.
Shares of the company were trading down 19 percent at $31.99 in noon trade on the Nasdaq. They had hit a year low of $31.15 earlier. (Reporting by Bijoy Koyitty; Editing by Deepak Kannan)