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Grid Dynamics shares target increased, buy rating on strong AI demand

EditorNatashya Angelica
Published 12/12/2024, 08:46 PM
GDYN
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On Thursday, Needham maintained a Buy rating on shares of Grid Dynamics Holdings (NASDAQ:GDYN), currently trading at $19.63 with a market capitalization of $1.65 billion, and increased the price target to $25 from $20.

The firm's confidence in the company has grown following recent investor meetings with GDYN's CFO, Anil Doradla. These meetings, which took place earlier this week in Boston, have reinforced the belief that there is a sustainable improvement in demand for the company's services. InvestingPro data shows the stock trading near its 52-week high of $20.34, reflecting strong market confidence.

According to Needham, Grid Dynamics is poised to benefit from increased spending on artificial intelligence (AI) technologies as projects advance from initial concept stages to full-scale production.

The company is expected to gain significantly from its partnerships, particularly with large hyperscalers. This is seen as a critical factor in driving the company's growth and the revised price target. The market appears to recognize this potential, as InvestingPro data reveals an impressive 100.92% return over the past six months, with revenue growth forecast at 11% for the current fiscal year.

The analyst pointed out that Global 2000 companies are adopting a growth-oriented approach and are likely to ramp up their spending on next-generation technologies, including AI. This shift is anticipated to contribute to accelerating sequential growth for Grid Dynamics and could lead to upward revisions in financial estimates for the fiscal year 2025.

Supporting this outlook, InvestingPro reports that 5 analysts have recently revised their earnings estimates upward, suggesting growing confidence in the company's prospects. Subscribers to InvestingPro can access 10 additional investment tips and a comprehensive AI sector analysis through the platform's Pro Research Report.

The endorsement of Grid Dynamics' prospects is based on the expectation that the company will experience multiple expansions as a result of the potential increase in spending on AI and related technologies. The firm's analysis suggests that Grid Dynamics stands to benefit from the current market dynamics and the evolving IT spending environment.

In other recent news, Grid Dynamics has been in the spotlight due to a series of positive developments. The company exceeded revenue and EBITDA estimates in Q3, leading TD Cowen to raise its price target on the stock. The robust financial performance was driven by demand across key sectors and strategic acquisitions, including the successful completion of Mobile Computing and JUXT acquisitions.

Grid Dynamics also announced plans for a public offering of 5 million shares, contingent on market conditions, with J.P. Morgan Securities, William Blair & Company, and TD Cowen serving as joint book-running managers. This follows a strong Q3 performance, which saw record revenue of $87.4 million and Non-GAAP EBITDA of $14.8 million.

Looking ahead, the company anticipates positive Q4 revenues between $95 million and $97 million, with acquisitions projected to contribute 10% to this revenue. Despite conservative guidance for December due to holiday furloughs, strong demand from existing and new customers suggests a promising outlook. These are among the recent developments for Grid Dynamics.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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