Investing.com -- Truist downgraded Gartner to Hold from Buy and cut its price target to $210 from $235 in a note Wednesday, telling clients that a recovery in the research company's key growth metric now looks less likely in the near term.
Analyst Jasper Bibb pointed to weaker growth in contract value, the annual value of Gartner's subscription contracts, excluding the U.S. federal government. Ex-federal contract value growth slowed to 2.8% in the third quarter from 3.3%, and management dropped its target of about 4% growth exiting 2026.
"In our view, the uncertain macro backdrop and tougher comps in '27 complicate the CV re-acceleration narrative, which has driven the recent rally from summer lows of $126 to yesterday's close at $204," Bibb wrote.
Truist said the problem lies mainly in winning new business rather than keeping existing customers, as client retention improved. New sales fell 4% and 3% year over year in Gartner's two main subscription units.
"We expect the continued choppy selling environment (oil prices, war, etc.) will continue to weigh on new sales near-term," the analyst said.
He noted that Gartner flagged weakness in the Middle East, industries hit by tariffs and oil prices, and large tech vendors that are cutting budgets to fund AI investments.
Profits were strong. Adjusted EPS rose 30% to $3.59, well above the $2.84 consensus, and Gartner raised its 2026 guidance across all metrics.
Truist models 3% contract value growth in 2027 and does not expect the stock to re-rate without faster growth.
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