UPDATE 1-Cognizant backs Q3, 2008 revenue outlook, shares up

(Recasts; adds details, share movement)

Oct 10 (Reuters) - Cognizant Technology Solutions Corp (CTSH.O), an information technology service provider, reaffirmed its third-quarter and 2008 revenue outlook, and its shares rose as much as 8 percent.

For the third quarter, the company, whose clients include Aetna Inc (AET.N) and Molina Healthcare (MOH.N), expects revenue of $723 million. Analysts on average were expecting $722.8 million, according to Reuters Estimates.

Cognizant had, on July 31, cut its 2008 revenue outlook to $2.81 billion, which it backed on Friday, from $2.95 billion.

However, Citigroup analyst Ashwin Shirvaikar cut his price target to $26 from $40, citing the absence of any near-term catalyst.

The analyst said Cognizant was so far the only top tier Indian information technology provider that had cut its outlook to reflect a weak broader environment.

Despite the conservatism, he sees more than 60 percent upside from current levels over the next year and maintained his "buy" rating on the stock.

Shares of the company were trading up 90 cents at $17.05 Friday midday on Nasdaq . They touched a high of $17.44 earlier in the session.

The broader S&P 1500 IT Services Industry Index .15GSPITCS was down about 4 percent at 97.40 in midday trade. (Reporting by Aftab Ahmed in Bangalore; Editing by Amitha Rajan)