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Investing.com -- Jefferies downgraded Globant to Hold from Buy, warning that the technology services co is unlikely to regain faster revenue growth until 2027 as weakness in key regions and slow deal conversions drag on performance.
The broker said Globant’s organic revenue growth has trailed peers and is set to stay soft next year. It expects 2026 organic revenue growth of 0.5%, below the 2% increase pencilled in by consensus, citing persistent weakness in underperforming regions and verticals.
Organic constant currency growth fell 2% in the third quarter and is expected to bottom at a 7% drop in the current quarter.
Jefferies said Globant’s deal pipeline reached $3.7 billion in the third quarter, up 30% from a year earlier but flat from the second quarter, with limited conversion to backlog.
The firm cited continued client caution and rising deal complexity, adding that conversion rates are unlikely to improve in the near term given macro uncertainty, particularly in Latin America, which makes up about 20% of revenue.
Analyst also flagged ongoing risk in the company’s professional services business.
The brokerage said Globant’s new AI pods subscription model, introduced in June, could pressure revenue even if margins improve.
The model, which allows clients to buy AI-driven digital engineering work through a tokenized system, could reduce revenue by 25 to 35% versus traditional time and materials billing, Jefferies estimated, although it sees gross margins in the 50 to 60% range. Adoption remains limited so far.
Jefferies cut its price target to $61 from $80. While it lifted its 2026 adjusted EPS estimate to $6.13 on a lower share count, the brokerage warned that consensus expectations may be hard for Globant to beat in the near term.