Gartner stock price has crashed in the last 12 months, moving from a high of $584 in February to the current $246. Its market capitalization has crashed from over $45 billion to $18.25 billion today. It has also formed a bearish pattern, pointing to more downside.
Gartner stock price has formed a risky pattern
The weekly timeframe chart shows that the IT stock crashed from a high of $584 to the current $246 as co333ncerns about artificial intelligence replacing its business continued.
This chart shows that the stock formed a death cross pattern, which happens when the 50-week and 200-week moving averages cross each other. It is one of the most common bearish continuation patterns in technical analysis.
The stock has moved below the Supertrend indicator, and most importantly, it has formed a bearish flag pattern, which is shown in orange. This pattern is characterized by a long vertical line and a consolidation.
Therefore, the most likely scenario is where the IT stock will continue falling as sellers target the key support level at $200, down by about 20% below the current level.
Garner is at risk of AI disruption
The Gartner stock price has plunged in the past few months as concerns about AI disruption continue. Analysts believe that the company’s research business may be disrupted as some AI models can come up with them.
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However, the reality is companies will still need independent reports because of its expertise and the human element. It is also seeing more demand for help with AI. The company’s conferences and consulting services will also continue seeing resilient growth.
The most recent results showed that Gartner’s revenue rose by 2.7% in the third quarter to $1.5 billion. However, its net income dropped by 92% to over $35 million, while its operating free cash flow dropped by nearly 50% to $299 million.
Most of its revenue came from its insights segment. Its conferences business made $74.6 million from $75.6 million, while its consulting segment made $123.6 million from $127.6 million.
Wall Street analysts believe that the company’s business will continue struggling in the coming quarters. Data compiled by Yahoo Finance shows that the company’s revenue will be $1.76 billion, up by 1.89% YoY. This revenue growth will bring the annual revenue to $6.49 billion, up from 3% from the same period last year.
Analysts then expect the company’s revenue will come in at $6.7 billion, up by 3.36% YoY. They expect the earnings per share (EPS) to normalize this year, with the earnings per share rising to $13.47.
Gartner has become a bargain. Its forward price-to-earnings ratio has dropped to 19.2 from the sector median of 25.60 and its five-year average of 35.
Therefore, fundamentally, the company will likely continue doing well, which may lift its outlook. As such, chances are that its will drop in the near term and then bounce back in the longer term. This explains why the current price is lower than the average estimate of $283.
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