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Why Gartner Stock Dipped 13.4% in July

By Keith Noonan – Aug 9, 2019 at 10:54AM

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Downward revisions for full-year sales and earnings weighed on the research company's stock last month.

What happened

Shares of Gartner (IT 0.08%) fell 13.4% in July, according to data from S&P Global Market Intelligence. The research data company's stock sank after its second-quarter results arrived with disappointing guidance.

IT Chart

IT data by YCharts.

Gartner published second-quarter results on July 30, posting revenue of $1.07 billion (up 7% year over year) and non-GAAP adjusted earnings per share of $1.45 (up 41% year over year). Total contract value rose to $3.2 billion, up 11% year over year on a currency-adjusted basis. The average analyst estimate had called for earnings of $1.18 per share on revenue of $1.15 billion, but the strong earnings beat wasn't enough to lift the stock, because the company issued a downward revision for its full-year sales and earnings targets.

Graphs and charts superimposed over people sitting at a table using laptops.

Image source: Getty Images.

So what

Gartner's previous full-year revenue target had called for sales to come in between $4.22 billion and $4.32 billion, but it now expects sales for the year to wind up between $4.22 billion and $4.26 billion. The company now expects to post adjusted earnings per share between $3.39 and $3.64, down from its previous target for earnings per share between $3.82 and $4.19.

Now what

Gartner stock has moved lower in August, trading down roughly 5% in the month so far amid sell-offs for the broader market.

IT Chart

IT data by YCharts.

Hitting the midpoint of its sales and earnings targets would see the company posting 6% year-over-year revenue growth and roughly 7% EPS decline.

Gartner stock is priced at roughly 37 times this year's expected earnings.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

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