BOJ keeps interest rates flat, but flags rate hikes on rising inflation, GDP
Wednesday, UBS analysts made adjustments to Gartner ’s (NYSE:IT) stock outlook, lowering the price target to $565 from the previous $632 while maintaining a Buy rating on the shares. Currently trading at $444.50, the stock has declined about 7.6% year-to-date. The revision reflects concerns over business confidence and potential impacts from DOGE, a cryptocurrency. According to InvestingPro data, 9 analysts have recently revised their earnings expectations downward for the upcoming period.
Joshua Chan of UBS noted the recent data points seem to lean towards a negative outlook, suggesting a choppier business environment and headwinds related to DOGE. Chan indicated that these factors could influence Gartner’s core business performance, potentially affecting the company’s revenue growth in the first quarter. The analysts are contemplating a growth rate in the low to mid-7% range for Q1, which is slightly lower than their current projection of 7.9%. This aligns with the company’s recent performance, as InvestingPro data shows revenue growth of 6.1% in the last twelve months, with total revenue reaching $6.27 billion.
The firm’s analysts also expressed caution regarding the Research revenue guidance, stating they are already slightly below the company’s guidance. Despite this, Gartner’s shares have seen a devaluation to below the 3-year average multiples, which could provide some support to the stock price. The company maintains strong profitability with a gross margin of 67.7% and has demonstrated solid financial health, earning a "GOOD" rating from InvestingPro’s comprehensive analysis system.
Chan pointed out that while the de-rating offers a cushion, there are still significant narrative headwinds and risks to the top-line estimates that need to be considered. The reduced price target to $565 is a response to these multiple headwinds, particularly the company’s exposure to government sectors.
Gartner, known for its research and advisory services in information technology, has been navigating a complex market environment, with fluctuating business confidence and the unpredictable influence of cryptocurrencies like DOGE. UBS’s updated model, which will be further refined in April, takes into account these challenges as it evaluates the company’s financial prospects.
In other recent news, Gartner Inc. reported fourth-quarter financial results that surpassed analyst expectations. The company posted adjusted earnings per share of $5.45, significantly exceeding the consensus estimate of $3.26. Revenue for the quarter reached $1.7 billion, slightly above the anticipated $1.69 billion. Gartner’s contract value, an important indicator of future revenue, grew by 8% year-over-year to $5.3 billion. For the full year 2024, Gartner’s revenue increased by 6% to $6.3 billion, with adjusted earnings per share rising 24% to $14.09. The Research segment, the largest revenue contributor, grew by 5% in the fourth quarter, while the Conferences and Consulting segments experienced growth of 17% and 19%, respectively. Gartner generated $311 million in free cash flow during the quarter, marking a 59% increase from the previous year, and full-year free cash flow rose 31% to $1.38 billion. CEO Gene Hall noted plans to accelerate hiring, aiming for sustained double-digit growth in the future.
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