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Friday's trading session began with news that Needham has increased the price target on Globant S.A. (NYSE: GLOB) shares to $265 from the previous $245 while maintaining a Buy rating. This adjustment comes after Globant reported third-quarter results for the fiscal year 2024, which exceeded expectations in terms of revenue and earnings per share (EPS).
The company's performance was bolstered by a healthy organic fixed exchange rate growth of 9% year-over-year as it continues to expand its market share and secure new contracts. The sequential growth across most regions and verticals suggests a broadening recovery in demand, which is expected to extend into the fiscal year 2025.
Globant's management is optimistic, anticipating a modest improvement in organic growth for FY25 compared to approximately 10% for FY24. The firm's success is partly attributed to the strong adoption of artificial intelligence (AI)-led solutions, which could further enhance growth in the following fiscal year and beyond.
Needham's positive outlook is reinforced by the potential for future growth and possible upside surprises in FY25. The firm believes these factors could contribute to a re-rating of Globant's shares, prompting the decision to reiterate the Buy rating and raise the price target.
In other recent news, Globant has seen significant developments in its financial performance and strategic growth. CFRA, a financial research firm, has increased its price target for Globant to $248 from the previous $230, maintaining a Buy rating on the stock. This adjustment is based on 32.5 times the company's projected earnings per share (EPS) for 2025.
Despite a slight reduction in the EPS forecasts for the upcoming years, Globant's third-quarter performance showcased revenues of $615 million, marking a 13% year-over-year increase, and an EPS of $1.63, up 10% from the previous year.
Globant's relationship with its top client, Disney (NYSE:DIS), remains strong, with business growing by 18% year-over-year. Furthermore, Globant's accomplishments in artificial intelligence (AI) have been notable, with AI-related sales surging by 120% year-over-year to exceed $250 million. The company's global expansion strategy includes significant projects in the Middle East and new offices in Europe, with a growing workforce nearing 30,000 employees.
Regarding future expectations, Globant projects Q4 revenues between $642 million and $648 million, and an adjusted EPS anticipated between $1.71 to $1.75. The company also anticipates organic growth acceleration in 2025, with mergers and acquisitions contributing an additional 2%-3%. These recent developments highlight Globant's robust growth trajectory, underscored by its strategic investments in AI and global market expansion.
InvestingPro Insights
Globant's recent performance and Needham's optimistic outlook are further supported by key financial metrics from InvestingPro. The company's revenue growth remains strong, with a 19.01% increase over the last twelve months as of Q2 2024, reaching $2.28 billion. This aligns with the organic growth highlighted in the article and underscores Globant's ability to expand its market share.
The company's profitability is also noteworthy, with a gross profit margin of 36.06% and an operating income margin of 10.38% for the same period. These figures reflect Globant's ability to maintain healthy margins while pursuing growth strategies, including the adoption of AI-led solutions mentioned in the article.
InvestingPro Tips suggest that Globant's stock price has outperformed the S&P 500 in the past year, with a 23.06% total return over the last 12 months. This performance aligns with the positive sentiment expressed by Needham and supports their decision to raise the price target.
For investors seeking a deeper understanding of Globant's potential, InvestingPro offers 15 additional tips that could provide valuable insights into the company's financial health and future prospects.
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