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On Friday, Baird reaffirmed its positive stance on Gartner Inc (NYSE:IT), a leading research and advisory company, maintaining an Outperform rating and a $565.00 price target.
The firm's outlook is based on the belief that Gartner's risk/reward profile is attractive, noting that the company's growth in Research Contract Value (CV) likely reached its lowest point at a robust 7% increase. The firm also highlighted Gartner's ability to compound growth over time.
The analyst from Baird pointed out that Gartner has been successfully implementing its growth strategies even as it faces headwinds in tech vendor revenue.
These challenges are expected to lessen, partly due to more favorable comparison bases from previous years and the cycling through of contract renewals. However, they also acknowledged the current macroeconomic uncertainties and suggested that a meaningful acceleration in CV growth might take time. They believe investor expectations are appropriately set regarding this timeline.
Gartner's medium to long-term growth prospects were described as attractive by Baird, supported by a significant remaining market penetration opportunity. The firm expressed confidence in Gartner's potential as a high-quality growth company. They also noted the appeal of the current entry point for Gartner's stock, which is trading at approximately 29 to 30 times Baird's estimated 2025 free cash flow per share range.
The analyst concluded by emphasizing Gartner's proven track record and the company's potential for further acceleration in growth over time. Despite the uncertain macroeconomic landscape, Baird's assessment suggests confidence in Gartner's strategic approach and its ability to navigate through potential challenges. The $565.00 price target reflects this optimism in Gartner's future performance.
In other recent news, Gartner Inc. has revealed robust financial results for the second quarter of 2024. This includes an 8% year-over-year increase in EBITDA, reaching $416 million, and a 13% growth in adjusted earnings per share to $3.22. The company also reported high-single-digit growth in contract value, exceeding expectations, and a 10% growth in contract value with enterprise function leaders in the research segment.
In response to Gartner's performance, BMO Capital Markets revised its stock price target for the company to $510, up from the previous target of $450, maintaining a Market Perform rating. The firm's adjustment follows Gartner's margin-driven earnings beat, attributed to lower-than-anticipated selling, general, and administrative expenses.
These developments are part of Gartner's recent strategic initiatives and operational goals, which also include plans for sales force recruitment in the latter half of 2024. Gartner's full-year guidance has been updated, with research revenue projected to be at least $5.105 billion.
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