Globant stock sees price target lifted by $15, KeyBanc holds Overweight on 2Q growth

On Friday, KeyBanc Capital Markets adjusted its outlook on Globant S.A. (NYSE: GLOB), a company specializing in digital and cognitive transformations. The firm increased the price target to $235 from the previous $220, while maintaining an Overweight rating on the stock.

The decision follows Globant's second-quarter report for 2024, which met expectations and provided guidance for the third quarter and the full year that was largely in line with forecasts, with a slight increase to EBIT margins. The price target adjustment reflects Globant's solid execution and the justification for a slightly higher multiple of 20 times the calendar year 2024 EV/EBITDA. This multiple is consistent with the three-year next twelve months average of 21 times.

Globant has demonstrated strong growth during the second quarter of 2024 across various geographies, verticals, and with both new and existing strategic customers, including a notable 11% year-over-year increase with Disney. Despite facing wage-related foreign exchange pressures in key delivery centers such as Mexico, Colombia, and Brazil, Globant has managed to maintain industry-leading gross margins and robust EBIT percentages.

The company's bookings have shown resilience, growing 17% year-over-year in the first half of 2024, supported by firm pricing and an increase in overall revenue per head by 9% in the second quarter due to pricing strategies, a mix of solutions and services, and a shift in delivery center locations. Additionally, Globant is actively expanding its workforce, with plans to continue hiring throughout 2024 to meet the strong market demand.

KeyBanc expressed confidence in Globant's ability to sustain its market share growth and outpace industry trends into the calendar year 2025. This optimism is supported by secular growth trends in areas such as artificial intelligence, underpinning the Overweight rating on Globant shares.

In other recent news, technology services company Globant S.A. reported robust Q2 results, with revenue reaching $587.5 million, an 18.1% increase year-over-year. This growth was primarily driven by a strategic focus on AI, which led to a 130% surge in AI-related revenues in the first half of 2024. The company's adjusted net income stood at $66.9 million with an adjusted diluted EPS of $1.51.

Several analysts have adjusted their financial outlook for Globant, reflecting confidence in the company's performance. TD Cowen raised the price target to $230, Piper Sandler increased it to $240, and Needham boosted its target to $245, all maintaining positive ratings.

In addition to its financial performance, Globant has expanded into new markets with the launch of the Globant GUT network for marketing technology and AI reinvention studios. The company anticipates maintaining an industry-leading organic growth rate of approximately 10% and expects higher margins and EPS for the full year 2024.

InvestingPro Insights

As Globant S.A. (NYSE: GLOB) continues to navigate the competitive landscape of digital and cognitive transformations, InvestingPro data and insights provide a deeper understanding of the company's current valuation and performance. With a market capitalization of $8.95 billion and a high P/E ratio of 50.77, Globant is trading at a premium, which reflects the market's confidence in its growth prospects. This is further supported by the company's robust revenue growth of 18.54% over the last twelve months as of Q1 2024, outpacing many of its peers.

The company's commitment to profitability is evident, with InvestingPro Tips highlighting that Globant is expected to remain profitable this year and has been profitable over the last twelve months. Moreover, the company's strategic pricing and operational efficiencies have led to a solid gross profit margin of 36.23% and an operating income margin of 10.42%, showcasing its ability to convert top-line growth into bottom-line success.

Investors considering Globant's shares can find additional insights and tips on InvestingPro, which includes a total of 9 InvestingPro Tips for Globant. These tips can help investors make more informed decisions by considering factors such as the company's earnings multiples, debt levels, and valuation metrics. With an analyst fair value target of $220 and an InvestingPro fair value estimation of $226.04, there appears to be a consensus on the stock's potential upside.

For those interested in a comprehensive analysis, further details and tips can be found on InvestingPro's Globant page.

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