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On Friday, Piper Sandler analysts adjusted their stance on Globant S.A. (NYSE: GLOB), downgrading the company’s stock rating from Overweight to Neutral and reducing the price target to $116 from the previous $154. This decision follows Globant’s first-quarter earnings report, which fell short of Wall Street’s expectations, prompting the company to also revise its forecasts for the fiscal year 2025. According to InvestingPro data, five analysts have recently revised their earnings estimates downward, while the company currently trades at a P/E ratio of 34.6x.
The downgrade was influenced by a combination of factors, including macroeconomic headwinds that affected Globant’s revenue growth more severely than initially anticipated. Despite previously lowering their estimates, Piper Sandler acknowledged that they had underestimated the impact of these challenges. The company cited specific difficulties in Latin America and among some of its largest clients, as well as industries affected by tariffs like airlines, pharmaceuticals, and technology. InvestingPro analysis indicates the company maintains a "GOOD" overall financial health score, with revenue growth of 15.3% in the last twelve months, though its stock has declined by 34.7% over the past six months.
Globant also experienced a reduction in the number of its $1 million and $100,000 customers, as well as a decrease in its employee headcount, both of which occurred sequentially. Piper Sandler noted that while Globant is well-positioned for long-term success due to its service offerings, it is currently challenging for the company to take significant independent actions that could counteract the prevailing demand trends.
The analysts at Piper Sandler emphasized their intention to continue monitoring the market for signs of improvement in the demand environment that could signal a turning point for Globant. Until such an inflection point is observed, they maintain a Neutral rating on the stock.
In other recent news, Globant reported first-quarter earnings that did not meet analyst expectations, which has drawn significant attention from investors. The company posted adjusted earnings per share of $1.50, falling short of the consensus estimate of $1.60. Revenue for the quarter was $611.1 million, which, despite being a 7% increase year-over-year, was below the projected $624.97 million. Additionally, Globant issued guidance for the second quarter and full year that was weaker than anticipated. The company expects second-quarter revenue of at least $612 million and adjusted EPS of at least $1.52, both below the consensus estimates of $641.5 million and $1.65. For the full year, Globant forecasts revenue of $2.464 billion and adjusted EPS of $6.10, compared to analyst expectations of $2.636 billion and $6.82. CEO Martín Migoya expressed optimism about AI-related opportunities, while CFO Juan Urthiague highlighted the need to focus on margins and cash flow in a challenging economic environment. Despite an increase in high-value customers, the earnings miss and weak guidance have prompted investors to reconsider Globant’s short-term growth potential.
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