Gartner: DCF FV=$223 vs $158 (P(above)=92.6%). PE=16 is cheap vs historical 25x+. Analyst consensus $190 = 20% upside. Thesis: Gartner is a toll road on IT spending decisions — subscription model, high retention, pricing power. Missing element: below 200dma (momentum headwind), no near-term catalyst identified. Upgrading 5→7.
Prior conviction 6/10 was too generous given macro deterioration. Government revenue cliff (-M) is persistent, not transient. Wallet retention decline signals deeper customer budget pressure. Digital Markets sale (M) is necessary deleveraging but doesn't address core growth problem. Watch FY2026 guidance closely—need Insights to re-accelerate or conviction goes to 4.
Fair Value Distribution — percentile bands
94.0% of simulations place fair value above current price
WHAT IS PRICED IN
Revenue-Based Reverse DCF
-2.9%/yr
±4.2% · revenue growth to justify current price
FCF-Based Reverse DCF
-4.5%/yr
±2.4% · FCF growth to justify current price
THE GAP
Market pricing margin expansion or capex normalization
KEY VALUE DRIVERS
Spearman correlation — what moves this valuation most
Market-leading advisory with 86% recurring revenue. Research subscriptions are non-discretionary enterprise spend — resilient in downturns. Gov spending normalization could re-accelerate CV growth above 5%+ by H2 2026.
CV growth at 1% (was 8-10%), wallet retention -6-7pts, government spending collapsed -$70M, consulting declining. At $165, ~18x forward P/E — not cheap enough for a decelerating compounder. EDGAR 10-K still unread.
CV growth re-accelerates above 5% (upgrade). Wallet retention stabilizes and improves. Gov spending normalizes. Negative: CV growth goes negative or retention falls below 80%.
Updated Mar 13
Contract value growth 1%, wallet retention down 6-7pts, government revenue collapsed by M. Consulting weakening. Digital Markets divestiture (M) signals restructuring need. Insights segment losing mom...
Gartner's FY2025 10-K reveals a company hitting a growth wall: core Insights contract value grew only 1%, wallet retention collapsed (down 6-7 points), government spending evaporated (contract value d...