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Investing.com - Jefferies has initiated coverage on Grid Dynamics Holdings (NASDAQ:GDYN) with a Buy rating and a price target of $11.00, citing attractive valuation levels driven by what it believes are transient AI disruption concerns. The stock, currently trading at $7.53, has declined 66% year-to-date and is trading near its 52-week low, according to InvestingPro data.
The digital engineering-focused IT services firm is currently trading at less than 2.0x net cash, or 10x adjusted P/E excluding cash, according to Jefferies. InvestingPro analysis indicates the company is currently undervalued, with strong fundamentals including a healthy current ratio of 7.37 and more cash than debt on its balance sheet. The research firm expects Grid Dynamics’ high single-digit organic growth this year to improve to low double digits next year, accompanied by stable to higher adjusted operating margins.
Jefferies projects Grid Dynamics will generate revenues of $416 million in 2025, reflecting 19% year-over-year revenue growth, with 8% coming from organic sources. This projection aligns with the company’s strong track record, as InvestingPro data shows revenue growth of 22.27% in the last twelve months. This growth rate exceeds both the broader IT services industry and most digital transformation peers. Get access to 10+ additional ProTips and comprehensive analysis with an InvestingPro subscription.
The firm expects Grid Dynamics to at least maintain this organic growth rate in 2026 and 2027, with potential modest improvement to low double digits as the technology cycle advances and more discretionary growth-oriented spending returns.
Despite adjusted operating margins remaining below peers at approximately 8-9%, Jefferies believes these levels will hold steady as the company continues investing in building its next generation of products and services.
In other recent news, Grid Dynamics Holdings Inc. reported its financial results for the second quarter of 2025, surpassing Wall Street expectations. The company achieved an earnings per share of $0.10, outperforming the forecasted $0.09, and revenue reached $101.1 million, exceeding projections. Additionally, Grid Dynamics announced the launch of its Temporal Agentic AI Platform, developed in collaboration with Temporal Technologies. This new platform is designed to assist enterprises in building and managing AI solutions at scale, addressing challenges in AI deployment with enhanced reliability and fault tolerance. The platform utilizes Temporal’s durable execution capabilities, ensuring that complex AI workflows can resume after failures or system restarts. These developments mark significant progress for Grid Dynamics as it continues to innovate in the AI sector.
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