Wedbush analyst Moshe Katri initiated coverage on Grid Dynamics Holdings Inc (NASDAQ:GDYN) with an Outperform rating and a price target of $13.
The rating reflected recent, encouraging first quarter and calendar year 2024 results.
The company's GenAI-focused initiatives and product engineering expertise bode well for a second-half calendar year 2024 sequential uptick.
Katri noted that the company's outsized exposure to retail and TMT verticals, which impacted growth in calendar year 2023. He expects the company to post mid-single-digit and mid-double-digit currency revenue growth between 2024 and 2025, respectively.
GDYN's partnership model provides significant, long-term monetization opportunities. According to the analyst, roughly 13% of calendar year 2023's revenues will come from partnerships.
These partnerships include AWS, Google Cloud, Microsoft Partner (Azure), Commercetools, Contentstack, Lucidworks, Dataiku, Apollo, Bloomreach, and Databricks.
From these partnerships, GDYN benefits from joint PR and marketing campaigns, market development funds, lead sharing, joint pursuits, partner sales funds, migration acceleration funds, early access to new releases, joint development of accelerators, and other marketplace listings.
Katri flagged GDYN's AI focus provides monetization opportunities, with 25% of software engineers AI trained.
The analyst said GDYN's Generative AI offering partners with customers to employ large language models and prompt guided image generation in applications such as product design, visualization, knowledge retrieval, wealth management, and customer service.
As per Katri, GDYN's GigaCube growth framework will allow it to institutionalize and scale its service offerings, expand its presence, drive client growth and efficiency, and grow across new industry verticals.
Katri projected second-quarter revenue and EPS of $81 million and $0.07.
Grid Dynamics Holdings stock gained 16% in the last 12 months.
Price Action: GDYN shares traded higher by 1.33% at $10.31 on last check Friday.
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