A Look at Globant (NYSE:GLOB) Valuation Following Weaker-Than-Expected Q1 Results

Globant (NYSE:GLOB) has caught the attention of investors after its first-quarter results fell short of expectations. The main issue is that revenue landed lower than what many anticipated, as clients chose to delay or cut back on IT and digital transformation projects. This trend, especially pronounced among North American customers, reflects bigger worries about the economic outlook and has put the spotlight on whether Globant’s near-term growth story is on shaky ground.

The weaker financial update affected Globant’s stock all year. Over the past year, shares have dropped nearly 71%, and the decline has only accelerated recently. Even though Globant reported annual revenue growth of just under 5%, it has not been enough to appease a market that increasingly prizes visible, short-term momentum over longer-term potential. Still, the company’s net income saw stronger growth, suggesting operational resilience even as demand wavers.

With Globant stock down sharply this year, the big question is whether pessimism has swung too far or if the market has simply adjusted to a slower growth reality. Is there value hiding here, or is the price right where it should be?

Most Popular Narrative: 45% Undervalued

According to the most widely followed narrative, Globant is currently seen as significantly undervalued, with expectations for earnings acceleration and margin expansion driving a much higher fair value than its current price.

The rapid adoption of AI and generative AI across industries is dramatically increasing the complexity of enterprise technology environments. This is driving greater demand for specialist partners to design, implement, and maintain tailored AI solutions. Globant's differentiated Enterprise AI platform, AI pods subscription model, and recent multiyear partnership wins (for example, OpenAI and AWS) position the company to capture a greater share of this accelerating market. These dynamics may boost both revenue growth and long-term margins as more high-value, recurring AI engagements convert in the pipeline.

Why are analysts so bullish despite this year’s setbacks? The secret sauce behind their fair value lies in ambitious expectations for profit acceleration and a powerful margin leap. Analysts are betting on a new business mix, sticky client wins, and a big financial turnaround ahead. Want to see which projections launch this valuation? And why do some believe Globant’s future could exceed most forecasts? Keep reading for the rarely shared drivers powering the price target calculation.

Result: Fair Value of $104.05 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent slow revenue growth and prolonged client deal cycles could seriously challenge the optimistic case for a sharp turnaround in Globant’s fortunes.

Find out about the key risks to this Globant narrative.

Another View: SWS DCF Model Checks the Math

Our SWS DCF model takes a cash flow-driven approach, focusing on future estimates instead of just recent headlines. It also points to Globant being undervalued. However, does this method capture what makes the current climate so unusual?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Globant for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Globant Narrative

If you see the story differently or want your own take, it only takes a few minutes to dig into the numbers and craft your own view. Do it your way.

A great starting point for your Globant research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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