Shares of a major IT research company fell significantly on Tuesday on relatively mild news. Gartner (NYSE: IT) saw its stock price plunge by 19.8 percent over the course of the trading day after the research and advisory services company revealed solid Q2 financial results, but still needed up lowering its full-year guidance.
It’s strange to see such drastic swings in stock price on what is relatively decent news overall, but short-sellers have likely been particularly active recently, jumping on any piece of somewhat bad news and pushing prices further downwards to a point where it’s likely unjustified.
Gartner’s recent Q2 results showed the company’s adjusted revenue figures rose by 9 percent, while earnings per share grew by 41 percent, or $1.45. In comparison to what Wall Street was expecting, only $1.18, this quarter was a relatively impressive one for the company.
“We delivered another strong quarter across our three businesses: Research, Conferences, and Consulting. We’ve equipped Global Business Sales with the resources, training and tools to achieve success and we’re beginning to see a return,” said CEO Gene Hall in a press release. “We continue to make calculated investments in our business and are well-positioned for sustained long-term, double-digit growth.”
For the full 2019 year, however, Gartner now expects that revenue will end up around $4.215 billion, down from the $4.24 billion it previously expected. While this is still a growth rate of between 9 to 10 percent in comparison to 2018, it certainly was enough to get some investors worried.
During the conference call, executives of Gartner said that while they have increased their expectations for their consulting business for the year, they’ve also modestly reduced their expectations for their research division in response to the lower-than-expected non-subscription service sales.
With the company decided to make a slow shift to more profitable sides of its business in the long run, it’s hard to blame management for allocating capital where there seem to be the most opportunities for growth. However, markets don’t really like having to be told to sit back and wait, and today’s decline more or less reflects this.
Shares of Gartner ended the day down 19 percent, hitting a six-month low not seen since late January/early February. Aside from this today’s decline, the stock has been steadily rising over that same period of time, and even on a one-year and five-year timeframe, has continued to rise steadily despite some pullbacks.
Today’s loss in stock price could very well be a good buying opportunity for long term investors, who aren’t shaken by potential short sellers looking to profit in the short term as today’s 19 percent drop will likely come back over the course of several days or weeks.
Gartner Company Profile
Based in Stamford, Conn., Gartner provides independent research and analysis on information technology and other related technology industries. Its research is delivered to clients’ desktops in the form of reports, briefings and updates.
Typical clients are chief information officers and other business executives who help plan a companies IT budget. Gartner also provides consulting services and hosted nearly 80 IT conferences across the globe in 2007. – Warrior Trading News
