Gartner (IT) shares plummeted 5.25% in Tuesday's pre-market trading session, despite the company reporting better-than-expected third-quarter earnings and raising its full-year guidance. The sharp decline comes as a surprise given the seemingly positive financial results, suggesting investors may be focusing on other factors or taking profits after recent gains.
The IT research and advisory company reported third-quarter adjusted earnings of $2.76 per share, surpassing the analysts' expectations of $2.41 per share. Revenue for the quarter came in at $1.52 billion, meeting Wall Street estimates. Gartner also raised its full-year 2025 adjusted earnings per share guidance to at least $12.65, up from its previous forecast of at least $11.75.
Despite the strong financial performance, the market's negative reaction could be attributed to concerns about future growth prospects or valuation concerns. The company reported a 3% increase in contract value, or 6% excluding the US Federal business, which some investors may view as modest growth. Additionally, the stock's recent performance and high valuation multiples might have set high expectations that even strong results couldn't satisfy, leading to profit-taking by some shareholders.
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