What Happened?
Shares of research and advisory firm Gartner (NYSE: IT) fell 4.2% in the afternoon session after Wolfe Research initiated coverage on the stock with a neutral 'Peerperform' rating, citing several pressures on the business. The research firm noted that Gartner's shares are under pressure due to budget constraints and concerns about AI disintermediation. This sentiment follows the company's recent second-quarter report, where it met analyst estimates but revealed that its total contract value grew by a modest 4.9% year-over-year.
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What Is The Market Telling Us
Gartner’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 22 days ago when the stock gained 4.8% on the news that stocks continued to rally as investor optimism grew for a potential Federal Reserve interest rate cut in September. This optimism was largely fueled by a recent consumer price index report that showed inflation easing, along with public comments from Treasury Secretary Scott Bessent advocating for a significant 50-basis-point rate cut. The prospect of lower borrowing costs tends to boost rate-sensitive sectors like Business Services, as it can encourage companies to increase spending on consulting, IT projects, and staffing.
Gartner is down 50.9% since the beginning of the year, and at $237.21 per share, it is trading 57% below its 52-week high of $551.80 from November 2024. Investors who bought $1,000 worth of Gartner’s shares 5 years ago would now be looking at an investment worth $1,808.
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