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On Friday, Goldman Sachs adjusted its stance on Globant S.A. (NYSE: GLOB), shifting the rating from Buy to Neutral and significantly reducing the price target to $120 from the previous $225. According to InvestingPro data, seven analysts have recently revised their earnings expectations downward, with current analyst targets ranging from $114 to $256. The decision came after the company’s first-quarter results and subsequent guidance fell short of expectations. Despite generating $2.46 billion in revenue with an 11.9% growth rate over the last twelve months, Globant experienced a noticeable decline in discretionary projects, particularly in Latin American markets such as Brazil and Mexico, which was partially attributed to the impact of tariffs.
The company also faced challenges across several of its key sectors, including Travel, Healthcare, and Technology. While management has expressed confidence in the revised guidance, suggesting it is conservative and does not rely on an uptick in current demand levels, the forecast for organic growth in 2025 is roughly flat. This projection places Globant’s growth prospects on par with its industry peers, suggesting that the stock may not command a premium valuation in the near term.
Despite the downgrade, Goldman Sachs acknowledged Globant’s enduring competitive edge in technology and potential to leverage its pipeline of advanced projects in the future. However, the firm anticipates that it could take multiple quarters before the markets and clients critical to Globant’s business witness a favorable growth trajectory. With limited factors to propel the stock’s performance until a recovery in end demand materializes, the outlook remains cautious.
Since Globant was added to the Goldman Sachs Americas Buy list on June 24, 2024, its shares have declined by 23.5%, in contrast to the S&P 500, which has risen by 8%, and the Argentina Merval Index’s increase of 47.6% over the same timeframe.
In other recent news, Globant reported first-quarter earnings that did not meet analyst expectations, with adjusted earnings per share of $1.50 falling short of the projected $1.60. Revenue for the quarter was $611.1 million, up 7% year-over-year but below the anticipated $624.97 million. The company also issued guidance for the second quarter and full year 2025 that disappointed investors, with revenue and adjusted EPS forecasts trailing consensus estimates. In response to these results, Needham, JPMorgan, and Piper Sandler have adjusted their outlooks on Globant. Needham lowered its price target to $115 while maintaining a Buy rating, citing a decline in demand and project delays. JPMorgan reduced its target to $108 but kept an Overweight rating, suggesting that the outlook has become less risky despite the setbacks. Meanwhile, Piper Sandler downgraded Globant from Overweight to Neutral and set a new price target of $116, highlighting macroeconomic challenges and specific industry difficulties. Globant’s management acknowledged the challenging environment but emphasized their focus on AI-related opportunities and maintaining financial discipline.
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