IT consultant Gartner's stock rockets to a record as uncertainty and volatility fuel big earnings beat

By Tomi Kilgore

Gartner raises full-year guidance, and investors enjoy biggest one-day gain in more than three years

Shares of Gartner Inc. blasted off into record territory Friday after the information-technology research and consulting company reported third-quarter earnings that beat by a wide margin and raised the full-year outlook, as the company benefited from an uncertain macroenvironment.

"The external environment remains volatile and uncertain. The tech sector is still adjusting to post-pandemic demand. The banking industry continues to grapple with rising interest rates. Supply chain challenges are still in many industries. There's heightened in geopolitical volatility and more," Chief Executive Eugene Hall said on the post-earnings conference call with analysts, according to an AlphaSense transcript. "Leaders know they need help, and they know Gartner is the best source for that help."

Gartner's stock (IT) soared 16.2% in morning trading, putting it on track to close above the July 18 record close of $374.04. The stock was headed for its biggest one-day gain since it ran up 16.4% on March 26, 2020.

The company reported net income that rose to $180 million, or $2.26 a share, from $173.5 million, or $2.17 a share, in the same-period a year ago.

Excluding nonrecurring items, adjusted earnings per share increased to $2.56 from $2.41, well above the FactSet EPS consensus of $1.96.

Revenue grew 5.8% to $1.41 billion, to top the FactSet consensus of $1.39 billion. Research revenue rose 6.2% to $1.22 billion, above the FactSet consensus of $1.21 billion; consulting revenue jumped 24.1% to $132.8 million, to beat expectations of $115.3 million; and conferences revenue dropped 25.7% to $57.2 million, to miss expectations of $64.6 million.

Gartner said it spent $209 million to repurchase 600,000 shares during the quarter. In October, the company also increased its stock-buyback authorization by $500 million, which represents about 1.6% of Gartner's current market capitalization of about $30.87 billion.

For 2023, the company raised its guidance for adjusted EPS to $10.90 from $10 and for revenue to $5.89 billion from $5.85 billion. The current FactSet consensus is for EPS of $10.29 and revenue of $5.88 billion.

Gartner's stock has run up 15.1% over the past three months, while the S&P 500 index SPX has slipped 3.3%.

-Tomi Kilgore

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11-03-23 1139ET

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