The stock has faced numerous challenges, dropping 32% since the start of the year. However, UBS analysts believe there is potential for at least 40% growth.
This stock will rise 40% (according to UBS) if it manages to overcome some difficulties related to the exchange rate and can manage its debt safely.
This company, with a portfolio that includes blockchain, cloud technologies, cybersecurity, data, and artificial intelligence, digital experience and much more, is considered a leading provider of digital transformation services worldwide. According to UBS, this company could see a 40% increase in the value of its shares, thanks to several key factors that determine its success.
Let’s see below which title it is and what the key factors are that will determine its success.
Globant numbers
The stock selected by UBS is Globant. The company - founded in Buenos Aires twenty years ago - has achieved an important position in the information technology sector, with a global presence in over 30 countries and a workforce of over 27 thousand employees.
The company boasts an impressive overall revenue of $1.9 billion and a prestigious client portfolio, including Google, Electronic Arts, Disney, FIFA and, in Italy, Allianz Bank and BPer.
In first quarter of 2024, Globant reported revenue of $571.1 million, highlighting a notable increase of 20.9% over the prior year, exceeding expectations.
CEO Martin Migoya highlighted the company’s ability to expand its market share despite economic uncertainties, thanks to key factors such as the adoption of artificial intelligence and geographic scalability. Globant’s growth outlook remains optimistic, with a mid-teen growth forecast for the current year and a strong emphasis on artificial intelligence as a catalyst for future development. The company continues to consolidate its global presence, including expansion into countries such as Italy, where it recently acquired Sysdata, strengthening relationships with major clients such as Allianz Bank and BPer.
Globant will rise by 40% (according to UBS) if...
Globant, according to UBS, could rise 40% to around $230 thanks to key business fundamentals that should give it a distinctive competitive advantage. However, the company must keep a careful eye on its debt level, considering the implications this may have on its future.
- Globant’s debt/equity ratio
- Source: Simplywallstreet
Like many other companies, Globant relies on debt to finance its growth. However, it is crucial to evaluate whether this debt makes the company risky. Debt can pose significant risks: if the company is unable to repay its lenders, it could find itself in a vulnerable position. While Globant has a strong cash and receivables base, with $324.8 million in cash and $560.1 million in near-term receivables, it is important to consider its debt-to-cash ratio carefully.
While the company’s balance sheet looks quite solid, with total liabilities almost in line with its liquid assets, it is essential to closely monitor debt management in the context of the company’s growth prospects. Furthermore, Globant has demonstrated a robust ability to generate cash flow, which is crucial for debt management and ensuring a stable financial position in the long term.
- Globant’s graph
- Source: Tradingview
Since the beginning of the year, the stock has lost around 32% and is trading at a discount of 15%, according to analysts, but Globant’s ability to gain market share is significant and could support a future rise in the stock.
In summary, although Globant does not appear to be in liquidity trouble, it is important to maintain constant vigilance on debt management to ensure sustainable growth and a strong future.
|DISCLAIMER
The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader maintains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public for savings.|
Original article published on Money.it Italy 2024-06-06 15:47:00. Original title: Questo titolo salirà del 40% (secondo UBS)
