Gartner (IT) faces risks to near-term contract value expansion as macroeconomic uncertainty, elevated oil prices and seasonal weakness could weigh on client budgets, RBC Capital Markets said.
The brokerage said in a Sunday note that the selling environment remains challenging due to "belt tightening" conditions, leading to longer buying cycles and extended deal approval processes. However, RBC expects contract value growth to improve through the year toward mid-single-digit expansion.
RBC estimates contract value growth of about 1.7% year over year in Q1 and net contract value increase of about negative $21 million.
Drivers for the expected improvement include easier comparisons from prior-year impacts from the Department of Government Efficiency, recovery in tariff-affected industries, improved sales productivity and tech vendor growth. The firm also noted Gartner is increasing focus on new logo opportunities while continuing share repurchases.
RBC has a sector perform rating on Gartner, with a $175 price target.
Shares of Gartner were down 1.3% in Monday trading.
Price: 155.84, Change: -2.01, Percent Change: -1.28
Comments