AI And Global Expansion Will Unlock Future Value

Key Takeaways

• Strategic focus on high-value AI, SAP migration, and proprietary platforms positions the company for margin expansion, recurring revenues, and long-term growth.
  
• Global expansion and operational turnarounds are set to reduce regional risk and boost profitability through revitalized underperforming units and broader market reach.
  
• Structural and operational challenges, reliance on limited services, FX exposure, ongoing restructuring, and modernization needs threaten profitability, growth, and competitive differentiation.

Catalysts

Provides digital transformation services.

• The company's accelerated investment and expanding client wins in AI-centric and GenAI offerings (e.g., Wynxx, multimillion-euro AI platform contracts) position GFT to capitalize on the rising demand for AI, machine learning, and next-generation tech implementation across banking, insurance, and manufacturing, likely supporting revenue growth and margin expansion from higher-value services.
  
• GFT's recent entry into high-margin SAP migration and modernization services via the Megawork acquisition targets the global wave of mandated SAP S/4HANA upgrades-an area with structural long-term demand-which should provide a significant topline and margin growth driver through 2027 and beyond.
  
• Ongoing global expansion, with particularly strong momentum and double-digit growth in the USA, Latin America, and APAC, suggests geographic diversification and reduced dependence on stagnant European markets, supporting resilience in revenue and reducing risk to earnings volatility.
  
• The operational turnaround in underperforming units (notably the UK and Software Solutions), with leadership changes, go-to-market revamps, and strategic cost actions, is expected to restore these segments to growth and higher margins after a transition period, providing a path to improved group profitability and earnings quality from 2026 onwards.
  
• The company's focus on developing proprietary platforms (such as compliance/RegTech and digital assets solutions) and deepening partnerships with leading hyperscalers is likely to result in higher-margin, sticky service offerings, enhancing recurring revenue streams and supporting long-term margin expansion.

GFT Technologies Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming GFT Technologies's revenue will grow by 5.0% annually over the next 3 years.
• Analysts assume that profit margins will increase from 4.4% today to 5.4% in 3 years time.
• Analysts expect earnings to reach €54.9 million (and earnings per share of €2.08) by about July 2028, up from €38.7 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €43.8 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 18.4x on those 2028 earnings, up from 12.2x today. This future PE is lower than the current PE for the GB IT industry at 28.3x.
• Analysts expect the number of shares outstanding to grow by 1.79% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.18%, as per the Simply Wall St company report.

GFT Technologies Future Earnings Per Share Growth

Risks

• Persistent strategic and operational challenges in the UK and Software Solutions segments, including leadership churn, declining revenues, margin compression, project delays, and underutilized on-site teams, signal ongoing structural weaknesses that are not expected to be resolved until after prolonged "transition years," likely depressing group-level revenue growth and margins into 2026.
  
• Heavy reliance on a narrow service model in key markets, such as the UK's focus on large, long-cycle banking transformation projects, exposes the company to revenue volatility and pipeline gaps when clients delay or consolidate spending, risking further top-line instability and unpredictable earnings.
  
• Significant susceptibility to foreign exchange headwinds, as 60% of revenue and 70% of profit come from non-euro currencies, exposes GFT to potentially persistent negative FX impacts on both reported revenue and profits, particularly given macro volatility and an appreciating euro.
  
• Ongoing restructuring and capacity adjustments, especially as clients shift away from higher-cost local talent to offshore/nearshore delivery, could continue to generate one-off expenses and margin drag, particularly if wage inflation or misalignment of workforce persists, placing additional sustained pressure on net margins and profitability.
  
• The need for heavy recurring investment in modernization of proprietary products (e.g., SMARAGD) and the risk of lagging behind in emerging technologies (cloud-native, AI-centric offerings) could result in prolonged periods of weak profitability and require external partners or investors, potentially diluting future returns or limiting competitive differentiation, which would threaten longer-term earnings momentum.

Valuation

• The analysts have a consensus price target of €30.4 for GFT Technologies based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €1.0 billion, earnings will come to €54.9 million, and it would be trading on a PE ratio of 18.4x, assuming you use a discount rate of 7.2%.
  
• Given the current share price of €18.08, the analyst price target of €30.4 is 40.5% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.