Why Grid Dynamics Shares Are Gaining Today

  • Grid Dynamics Holdings Inc GDYN provided a positive update on its current operations and business continuity efforts in response to the conflict in Ukraine.
  • Needham analyst Mayank Tandon noted the critical takeaway from the update being a higher revenue guide. 
  • The 1Q22 outlook now called for $65 million+ in revenue, is well above the prior range of $55 million - $60 million. 
  • The company continues to hire staff in Western Ukraine, relocate existing employees to other regions of the world, and organically add staff in Central Europe, the US, Mexico, and India. 
  • Tandon was impressed with management's ability to quickly diversify their delivery and outperform their guidance in the face of the impact on their operations from the ongoing conflict. 
  • Tandon raised its outlook for 1Q22, FY22, and FY23, reiterating its Buy rating and raising the price target to $25 (55.1% upside) from $22.
  • Tandon saw the recent sell-off as overdone, especially in light of the robust demand environment, management's aggressive efforts to shift work away from Ukraine/ramp hiring in other regions, and the company's rock-solid balance sheet. 
  • Tandon saw the growth and margins pressured over the next few months, followed by a sharp recovery once headcount ramps in other regions and tensions eventually ease in Eastern Europe.
  • Price Action: GDYN shares traded higher by 5.82% at $15.92 on the last check Thursday.
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