Globant Posts Upbeat Q3 Results; Street Says Buy


Information technology and software development company Globant S.A. (GLOB) has reported better-than-expected results for the third quarter ended September 30, 2021. The strong results were on the back of robust growth in revenues.

However, following the results, shares of the company dipped 1.3% to close at $306.41 on Friday.

Revenue & Earnings

Globant’s quarterly revenues stood at $341.8 million, up 65% from the same quarter last year. Moreover, the figure comfortably outpaced the consensus estimate of $326.9 million.

Meanwhile, the company reported earnings of $0.98 per share, up 75% from the year-ago quarter. The figure surpassed the consensus estimate of $0.93 per share.

Other Operating Metrics

In other operating metrics, the company reported an adjusted gross profit margin of 39.8%, an increase of 80 basis points from the prior year.

Outlook

For the fourth quarter, the company expects to post revenues of at least $359 million against the consensus estimate of $341 million.

It anticipates earnings of $1.01 per share in the fourth quarter. The consensus estimate for the same is pegged at $0.97 per share.

Management Commentary

The CFO of Globant, Juan Urthiague, said, “Globant reported another quarter of robust revenue growth, up 65% year over year. Margins also improved, driven by our strong pricing power and SG&A efficiencies. Hiring remained solid in Q3, with the net addition of 2,223 IT professionals. We also provided robust Q4 guidance, implying a material increase in full year 2021 revenue, margin and EPS expectations.”

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Price Target

Recently, Cowen & Co. analyst Avishai Kantor reiterated a Buy rating on the stock. The analyst, however, raised the price target from $340 to $350, which implies upside potential of 14.2% from current levels.

The analyst commented, “Another beat & raise w/ incrementally bullish medium-term outlook, including 24-25% organic growth in 2022. Strong pace of hiring to meet demand continues with an increasingly global footprint apt to support more shots on goal w/ enterprise clients as GLOB remains underpenetrated OUS. Top client Disney grew ~74% y/y while wallet share opportunity across clientele remains attractive.”

Overall, the Street has a Strong Buy consensus rating based on 6 unanimous Buys. The average Globant price target of $361.33 implies upside potential of 17.9% from current levels.

Smart Score

Globant scores a 9 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock is likely to outperform market expectations. Shares have gained 62% over the past year.

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