3 Reasons Gartner Could Be the Best Buy of Q3
Tech advisory firm Gartner Inc. (NYSE: IT) has had a rough couple of months. Having hit an all-time high back in February, they’ve shown just how bad things can get when sentiment changes. Shares are down close to 60% from that peak, including a 27% slide this month, following the company’s Q2 earnings report. The drawdown has left Gartner looking like one of the hardest-hit names among large-cap tech and services stocks.
But the story may be shifting. Since we highlighted the bounce opportunity earlier this month, Gartner has stopped making new lows and has started to consolidate. The stock is showing signs of being bid back up, and a mini uptrend is beginning to take shape. For investors willing to take on risk in search of outsized returns, Gartner could be setting up as one of the most intriguing plays of the quarter. Let’s dive into three reasons this could be the best buy of Q3.
1. Oversold Conditions Offer a Compelling Setup
The first reason to be optimistic, for contrarians at least, is just how beaten down Gartner remains. As part of its most recent plunge earlier this month, its Relative Strength Index (RSI) sank to an extreme reading of 11, a level that screamed oversold and suggested selling pressure must soon be exhausted.
At that time, we flagged the setup as one that investors could not ignore, even if they weren’t sold on the company’s prospects for a full recovery. Since then, the stock has not only consolidated but also started to bounce, and while the RSI has recovered, it’s still barely over 30. By most standards, this means the stock can still be considered extremely oversold. Though given the RSI has nearly tripled, it now carries some solid bullish momentum, which points to further upside potential.
Investors who specialize in oversold setups look for precisely these moments, where downside momentum has been spent and the risk-reward profile is showing signs of the bulls having taken control.
2. Technical Momentum Is Shifting
Alongside the RSI, other technical signals are confirming that momentum is turning. The stock’s Moving Average Convergence Divergence (MACD) indicator delivered a bullish crossover last week, which means the short-term trend has overtaken the longer-term trend in an upward direction. This is a classic buy signal and further confirms that the buyers are starting to regain control from the sellers.
Price action reflects the same story. Gartner is now up about 10% off its lows, and every dip has been quickly bought. This pattern of higher lows after a steep drop is exactly how new uptrends form. The next level to watch is last week’s high around $250.
A push through there would open the door into the “gap territory” created when shares collapsed on earnings. Recovery rallies often move quickly once they enter gap zones, since there are fewer clear levels of resistance. If Gartner manages that, shorts will likely be forced to cover their positions too, which would only add fuel to the fire.
3. Analyst Support Remains Intact
The final piece of the puzzle is that even amidst the sell-off, many on Wall Street are still calling Gartner a red-hot buy. Both Barclays and Goldman Sachs, for example, reiterated their bullish stances earlier this month while the stock was in free fall. Goldman’s price target of $457 showed just how much potential they see in the stock—from Wednesday’s close, that represents a targeted upside of roughly 85%.
That said, the path forward is not without risk, and not everyone will be looking to buy and hold this for the long term. But that’s okay; there’s plenty of opportunity in the short term, too. The bulls will want to see Gartner shares avoid setting a new low, as that would undermine the emerging uptrend. As long as they can continue to consolidate above their low from earlier this month, the bias leans to the upside.
A decisive break above $250 would be the first real confirmation, and once that gap begins to fill, the rally should accelerate. For those willing to take some risk in pursuit of outsized gains in Q3, you might not need to look much further.
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