We came across a bullish thesis on Gartner, Inc. (IT) on Substack by Bulls On Parade. In this article, we will summarize the bulls’ thesis on IT. Gartner, Inc. (IT)’s share was trading at $429.79 as of March 25th. IT’s trailing and forward P/E were 26.86 and 35.34 respectively according to Yahoo Finance.
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Gartner (IT) is a dominant force in technology research and advisory services, blending stability with growth potential in a way that makes it a compelling investment for 2025 and beyond. The company, headquartered in Stamford, Connecticut, has built a reputation as the leading provider of actionable insights for executives navigating the rapidly evolving tech landscape. With a history dating back to 1979, Gartner has grown into a global powerhouse with a market cap exceeding $40 billion, fueled by its research-driven model and disciplined capital allocation. Its business is structured into three segments: Research, which generates over 80% of revenue through subscription-based services; Conferences, which brings industry leaders together; and Consulting, which provides customized solutions. The company’s reliance on recurring revenue streams ensures resilience in volatile markets, making it a steady performer regardless of macroeconomic conditions.
Gartner’s capital allocation strategy is a key differentiator, balancing organic growth, acquisitions, and shareholder returns with precision. The company reinvests heavily in its Research segment, continuously expanding content and integrating AI to enhance its value proposition. Acquisitions are another pillar of its strategy, with Gartner having completed over 36 deals since 1993, including the $2.6 billion purchase of CEB in 2017. This disciplined M&A approach focuses on adding complementary, high-margin businesses that strengthen Gartner’s core offerings. Additionally, the company has returned significant capital to shareholders, repurchasing over $4 billion in stock since 2015, reducing share count by approximately 20%, and boosting EPS. With a manageable debt load of $2.5 billion against $1.8 billion in cash, and a leverage ratio of 1.5x EBITDA, Gartner maintains financial flexibility to continue this strategy.
Gartner’s recent performance highlights its resilience and growth trajectory. In Q4 2024, revenue grew 5.8% year-over-year to $1.73 billion, with Research revenue climbing 6.1%, driven by an 8% increase in contract value to $4.9 billion. The Conferences segment rebounded post-pandemic, growing 7%, while Consulting revenue increased 3%. Adjusted EBITDA reached $405 million, and free cash flow surged 10% to $1.2 billion for the year, exceeding expectations. Despite a one-time charge that impacted net income, adjusted EPS of $3.15 beat estimates, reflecting strong operational execution. Gartner’s 92%+ renewal rate underscores the stickiness of its subscription model, insulating it from tech budget fluctuations.
Looking ahead, analysts forecast revenue of $6.8 billion in 2025, with EBITDA growing 8% to $1.65 billion. Contract value expansion and a post-COVID rebound in Conferences could drive further upside. While Gartner’s trailing P/E of 40x suggests a premium valuation, its forward P/E of 32x on an estimated $16 EPS indicates room for appreciation. A base-case scenario of $15 EPS with a P/E of 35x suggests a stock price of $525, while a bull case of $16 EPS at 40x implies $640, offering 40%+ upside. Gartner’s entrenched market position, subscription-based revenue, and disciplined capital deployment make it a rare growth stock with defensive traits.
Gartner, Inc. (IT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 57 hedge fund portfolios held IT at the end of the fourth quarter which was 35 in the previous quarter. While we acknowledge the risk and potential of IT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than IT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.