On Thursday, UBS analyst Joshua Chan raised the rating for Gartner (NYSE:IT) from Neutral to Buy, accompanied by an increase in the price target to $550 from the previous $484. The upgrade comes with a positive outlook on the company's financial performance, particularly in terms of Contract Value (CV) growth and EBITDA margins.
Chan's analysis suggests that Gartner's CV growth is expected to see a low point in the first quarter, followed by a pick-up in the second quarter and a strong close to the year with double-digit growth. This anticipated trajectory underpins the rationale for the upgrade.
The analyst's projections place the company's EBITDA margin for 2024 approximately 100 basis points ahead of consensus estimates on Wall Street. Furthermore, Chan's forecasts for EBITDA are 3-8% higher than the market's predictions through to 2026.
The revised price target and stock rating reflect the belief in the potential for Gartner's stock value to climb by 15-20% over the ensuing year. This optimism is fueled by the expected CV growth rebound and the possibility of margin expansion serving as key drivers for the stock's performance.
The upgrade by UBS signals confidence in Gartner's ability to surpass market expectations and achieve substantial financial growth in the coming periods.
InvestingPro Insights
In light of the recent upgrade by UBS analyst Joshua Chan, current data from InvestingPro underscores some intriguing aspects of Gartner's (NYSE:IT) market position. With a Market Cap of approximately $36.75B and a Price to Earnings (P/E) Ratio standing at 41.6, Gartner is trading at a high earnings multiple. This is further emphasized by an adjusted P/E Ratio over the last twelve months as of Q4 2023 at 45.5. Despite these high valuation multiples, the company has been able to maintain a Gross Profit Margin of 67.78%, showcasing its ability to manage costs effectively.
InvestingPro Tips highlight that Gartner is trading near its 52-week high, with the price at 96.98% of this peak. Additionally, the company has experienced a large price uptick over the last six months, with a 30.78% total return in that period. This aligns with the positive sentiment expressed by UBS, suggesting that Gartner's stock value has the potential to continue its upward trend.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available that provide further insights into Gartner's financial health and market performance. Utilize the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, and gain access to these valuable tips to inform your investment decisions.
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