Cantor Offers Bullish Take on Gartner Inc (IT) Following Acquisition of CEB


Gartner Inc (NYSE:IT) shares were stumbling 11% yesterday after the company’s announcement that it had acquired fellow Professional Services firm CEB. However, Cantor analyst Joseph Foresi joins the conversation with a converse perspective from apprehensive investors and reiterates an Overweight rating on shares of IT with a $108 price target, which represents a 17% increase from where the stock is currently trading.

The analyst explains, “Gartner looks to re-accelerate slowing growth at CEB through its scaled platform, providing a broader market presence and global footprint. Gartner plans to expand CEB’s existing best practice and talent management insights for executives in large enterprises into the mid-size enterprise segment, where Gartner has a more extensive market presence.

Ultimately, “Our initial reaction is positive, as the acquisition expands Gartner’s capabilities within an organization to include other areas like HR and CEOs. CEB should benefit from Gartner’s well-oiled sales efforts. Financial benefits include accretion, strong FCF generation and others,” Foresi contends.

The information-technology research firm is acquiring all of CEB’s outstanding shares in a cash and stock deal circling $2.6 billion at a total enterprise value rounding out $3.3 billion. This transaction includes IT’s assumption of CEB’s net debt angling $0.7 billion. Both companies’ Boards of Directors voted unanimous approval for the deal that is anticipated to close by the first half of 2017.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, one-star analyst Joseph Foresi is ranked #3,258 out of 4,369 analysts. Foresi has a 45% success rate and faces a loss of 0.5% in his yearly returns. When suggesting IT, Foresi forfeits 0.2% in average profits on the stock.

TipRanks analytics indicate IT as a Buy. Out of 6 analysts polled by TipRanks in the last 3 months, 4 are bullish on Gartner stock and 2 remain sidelined. With a return potential of nearly 14%, the stock’s consensus target price stands at $104.83.