Tuesday, Globant S.A. (NYSE: GLOB) received an upgrade in its stock rating from Neutral to Buy by UBS, although the firm reduced the price target to $230 from the previous $240. This change comes after UBS conducted an analysis that indicated signs of demand stabilization for Globant's services. The firm's research involved checking with Globant's partners and peers, which include industry leaders such as SAP, ServiceNow (NYSE:NOW), Adobe (NASDAQ:ADBE), Salesforce (NYSE:CRM), Accenture (NYSE:ACN), Capgemini, Cognizant (NASDAQ:CTSH), TCS, and EPAM.
According to UBS, these checks have increased their confidence in their estimates and have helped to de-risk the outlook for Globant. The analyst pointed out that despite the guidance reductions by its peers, Globant is trading at a 15% discount relative to its historical forward P/E ratio of 26 times. This suggests that the market has already accounted for potential top-line downward revisions of an additional 5-10%, which implies expectations that Globant might miss its guidance for the first time.
The firm emphasizes that positive earnings momentum is expected to support their positive thesis on Globant. They highlight that the company's booking strength and seasonal trends are likely to drive growth in the second half of 2024. This outlook is based on the current performance and future expectations of the company's operations and market position.
UBS's revised price target reflects a slight reduction from their previous target but still represents a vote of confidence in Globant's potential for stock performance improvement. The new target is set despite the current market pricing in the possibility of a revenue shortfall in the near term.
InvestingPro Insights
As Globant S.A. (NYSE: GLOB) navigates a dynamic market environment, the latest data from InvestingPro provides additional context for investors. With a market capitalization of $7.18 billion and a P/E ratio standing at 44.49, Globant is trading at a high earnings multiple, a point echoed by the InvestingPro Tips which suggest the company is trading at a high P/E ratio relative to near-term earnings growth. Despite this, the company's revenue growth remains robust, with an 18.54% increase over the last twelve months as of Q1 2024, and an even more impressive quarterly revenue growth of 20.88% in Q1 2024.
InvestingPro Tips highlight that Globant has been profitable over the last twelve months and analysts predict profitability will continue this year. However, investors should note that the stock is trading near its 52-week low and has seen a price fall of 26.43% over the last three months. These metrics could be indicative of current market sentiment and potential opportunities for investors seeking entry points. For those interested in deeper analysis, InvestingPro offers additional tips, and by using the coupon code PRONEWS24, investors can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
For a more comprehensive investment strategy, there are currently 12 additional InvestingPro Tips available for Globant, which could provide further insight into the company's financial health and market position. These tips and data points serve as a valuable tool for investors looking to make informed decisions regarding their investment in Globant.
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