European stocks started the day on May 21 with a slightly weaker note, marking a retreat from their recent impressive performance, with attention now shifting towards the upcoming earnings report from NVIDIA. The Stoxx 600 index dipped by 0.2%, showing a predominantly negative trend across most sectors, while futures for US equities remained relatively unchanged. Options markets in the US indicate significant anticipation for NVIDIA Corporation (NASDAQ:NVDA) earnings report this Wednesday, with traders expecting a notable shift in the chipmaker’s shares, reported Reuters.
JPMorgan Chase CEO Jamie Dimon signaled that his retirement might be closer than ever. This news could have a significant impact on the banking industry. Trump Media Enterprises, the media company founded by former President Donald Trump, reported a net loss of $327.6 million in the first quarter of 2024, despite generating only $770,500 in revenue. Home improvement retailer Lowe’s Companies reported better-than-expected earnings despite signs that consumers might be cutting back on spending on DIY projects. Bitcoin is currently experiencing a significant price increase, breaking the $71,000 mark for the first time since early April. Ethereum (Ether) is also experiencing a strong rally, jumping over 20% in response to ETF (Exchange-Traded Fund) optimism. This could signal increased institutional interest in the cryptocurrency space.
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Meanwhile, in Asia, shares took a breather following a week-long streak of gains. Investors remained vigilant regarding commodity prices, especially with the Bloomberg Commodity Spot Index hitting its highest point since January 2023. Notably, gold and copper were trading near their historical peaks, adding to the market’s attention.
On another front, oil prices experienced a decline, influenced by various market metrics suggesting a subdued outlook, despite heightened geopolitical tensions ahead of an OPEC+ meeting on supply. Brent crude’s prompt spread narrowed to its smallest backwardation since January, indicating a potential shift in market dynamics, while the reduction in bets on crude price increases continued among money managers. Futures trading reflected a period of consolidation, with implied volatility levels nearing lows not seen since 2019.
From Chinese property market side, analysts suggest that China’s recent efforts to bolster the property sector will require patience to yield results. Despite these initiatives, S&P maintains its view that the market is still “searching for a bottom.” Edward Chan from S&P emphasizes the government’s seriousness in stabilizing the property sector but notes that significant stabilization requires improvements in homebuyers’ demand and confidence, which have been affected by a nearly three-year market downturn. According to CNBC, recent measures, including lowered down payment minimums and enhanced liquidity for developers, aim to address the challenges. However, analysts like Goldman Sachs’ Hui Shan and Nomura’s Ting Lu believe more substantial actions are needed, estimating a significant funding requirement to address inventory excess and stabilize prices. While progress is noted, challenges persist, as indicated by declining real estate investment and slower-than-expected retail sales growth. Rebuilding homebuyer confidence is crucial, particularly concerning delivery delays and economic uncertainty. Analysts anticipate further efforts from Beijing, including a national survey to assess funding needs for completing residential projects. Ultimately, restoring confidence in the presale system is seen as essential for a genuine recovery in China’s housing markets. As market players navigate these developments, attention remains keenly focused on unfolding events and their potential impact on investment strategies and market sentiment.
On the stock market front, analysts are bearish on stocks such as Globant S.A. (NYSE:GLOB) by lowering their price targets. For a comprehensive overview of Globant S.A. (NYSE:GLOB) and other stocks affected by such adjustments, see Wall Street Analysts Just Trimmed Price Targets for These 10 Stocks .
Globant S.A. (NYSE:GLOB)
Price Reaction after the Price Target Cut: -9.98(-5.62%)
On May 17, Needham maintained its buy rating on Globant S.A. (NYSE:GLOB) while revising down its price target from $275 to $200. This adjustment, which led to a price reaction of -5.62%, came on the heels of Globant S.A. (NYSE:GLOB) first-quarter financial results for 2024. Despite reporting revenue that exceeded expectations and meeting forecasts for earnings per share, the technology industry player experienced a significant reduction in its price target. Globant S.A. (NYSE:GLOB) impressive performance in the first quarter included a 20.9% year-over-year revenue growth, with organic constant currency growth reaching 12.7%. Notable achievements during this period included securing a lucrative contract with a major global airline, forging a partnership with Formula 1, and acquiring seven new clients, each contributing over $1 million in revenue.
However, despite these successes, Globant S.A. (NYSE:GLOB) provided a slightly conservative outlook for the second quarter and revised its full-year guidance downward, citing increased foreign exchange pressures as the primary reason. It’s worth noting that this adjustment in the annual forecast does not reflect a change in the company’s organic growth projections, which still anticipate a 10% year-over-year increase. This growth trajectory stands in stark contrast to the flat trends projected by Globant S.A. (NYSE:GLOB) competitors for fiscal year 2024. Needham emphasized that, based on an ex-cash forward price-to-earnings (P/E) multiple of approximately 21 times for fiscal year 2025, the current valuation offers an attractive risk-reward proposition for investors. Despite the adjustment in the price target in response to the updated company guidance and prevailing market conditions, Needham reiterated its positive stance on the stock.
Polen Global Growth Strategy stated the following regarding Globant S.A. (NYSE:GLOB) in its first quarter 2024 investor letter:
“Finally, we added to our existing position in Globant S.A. (NYSE:GLOB) with the proceeds from trimming back our Accenture position. We think this is prudent because Globant’s valuation isn’t much higher than Accenture’s, but it should be able to grow EPS faster at ~20%+ over the next five years. We see both as excellent businesses benefiting from similar tailwinds behind the increasing need for trusted third party IT services providers and continue to feel good about holding both companies for the long term.”
You can visit Wall Street Analysts Just Trimmed Price Targets for These 10 Stocks to see the other stocks that are downgraded.
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Disclosure: None. This article is originally published at Insider Monkey.
