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Investing.com - Needham has lowered its price target on Globant S.A. (NYSE:GLOB) to $85.00 from $115.00 while maintaining a Buy rating, citing weaker demand outlook despite the company’s second-quarter results coming in slightly above expectations. According to InvestingPro data, the stock is currently trading near its 52-week low of $73.98, with shares down over 65% in the past six months, though analysis suggests the company is trading below its Fair Value.
The firm noted that Globant’s guidance was reduced due to ongoing demand weakness, with North America remaining particularly soft, primarily because of tempered spending from a large customer. Management expects these challenging conditions to persist in the near term. Despite these challenges, InvestingPro data shows the company maintains healthy financials with a current ratio of 1.56 and moderate debt levels.
In response to these headwinds, Globant has implemented a business optimization plan focused on enhancing AI capabilities and shifting toward a subscription-based model. The company reported early traction with this initiative, signing 18 clients in the second quarter.
The optimization plan is expected to deliver $80 million in annualized savings, providing some positive offset to the current demand challenges. Globant has also lowered its fiscal year 2025 revenue outlook.
Despite the reduced price target, Needham maintained its Buy rating, suggesting the risk-reward profile remains attractive for value investors with shares trading at approximately 11 times the firm’s fiscal year 2026 earnings per share estimate.
In other recent news, Globant S.A. reported its second-quarter earnings, slightly surpassing analyst expectations. The company posted adjusted earnings per share of $1.53, compared to the consensus estimate of $1.51. Revenue for the quarter reached $614.2 million, just above the expected $612.54 million, marking a 4.5% increase year-over-year. Despite these positive results, the company’s guidance fell short of Wall Street estimates, leading to a negative market reaction. In response to the recent earnings report, TD Cowen adjusted its price target for Globant from $120 to $92, while maintaining a Buy rating, citing slower deal closures and a revised outlook for the second half of the year. Goldman Sachs also maintained its Neutral rating with a $105 price target, noting a modest reduction in revenue guidance due to weaker demand in Globant’s markets. These developments highlight the mixed reactions from analysts and investors following Globant’s recent financial performance.
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