Cognizant lowers profit forecast on higher-than-expected tax rate

(Reuters) - IT services firm Cognizant Technology Solutions Corp lowered its forecast for annual earnings due to a higher-than-expected tax rate, driving its shares down 4 percent on Monday.

Cognizant also reported a better-than-expected revenue for the first quarter as financial services and healthcare businesses spent more on digital services such as cloud computing and cyber-security.

But the Teaneck, New Jersey-based company said it now expects a 9-cent hit to 2018 earnings per share due to a new interpretation of new U.S. tax laws, which limits the amount of foreign tax credits that Cognizant can receive.

Cognizant lowered its forecast for full-year profit to $4.47 per share from $4.53 and said it expects earnings for the current quarter of at least $1.09, below analysts' expectations of $1.12 per share, according to Thomson Reuters I/B/E/S.

Cognizant, however, raised the lower end of its expected range for full-year revenue. It now expects revenue of between $16.05 billion and $16.30 billion.

The company has invested heavily to offer digital services to financial and healthcare industry clients, which together account for a majority of the company's revenue.

Revenue from healthcare clients rose 11.8 percent in the three months ended March 31, while financial services revenue climbed 6.2 percent.

First-quarter net income fell to $520 million from $557 million. Excluding one-time items, the company earned $1.06 per share.

Revenue rose about 10 percent to $3.91 billion.

Analysts had expected first-quarter earnings of $1.06 per share and revenue of $3.90 billion.

Cognizant's shares fell 4.1 percent to $78.72 in premarket trading on Monday.

(Reporting by Arjun Panchadar in Bengaluru; Editing by Sai Sachin Ravikumar)