StreetSweeper Sees 'Ugly' Decline Coming For Globant

Globant SA (NYSE: GLOB) may be in for some volatility, and the potential drop could be down to $17/share.

"Globant S.A. is living proof of the old adage, ‘Beauty is only skin deep,'" said StreetSweeper. "Just scratch the surface of this Luxembourg company and you'll find enough Quasimodo-esque characteristics to send this stock running into an ugly, rapid decline."

StreetSweeper defended this position by pointing to "beautiful – and vague" rhetoric used in the company's SEC filings. According to the author, once investors "plow through all that dreamy stuff," a much different company emerges.

'Under Surveillance'

The article highlighted four supporting claims for its hesitant thesis, including:

Related Link: BWS Financial Initiates Coverage On Globant At Sell

In addition to the aforementioned concerns, StreetSweeper also bolsters its thesis by pointing out an initially deceiving claim, "These additional operating costs were hidden by the devaluation of the peso in Argentina, where the vast majority of Globant's workers are based." After this, a transcript between Citi's Ashwin Shirvaikar and Globant's CFO Alejandro Scannapieco followed, in which "management's comments – indicating the devalued peso will boost profit – supports the indication that costs are rising and will continue to rise."

Furthermore, analysts all along the Street have become disenchanted with the issue. "The glitz is gone," StreetSweeper proclaimed, "While there have been buy ratings, BWS Financial initiated coverage of Globant on Feb. 8 with an unusual ‘Sell.' In fact, BWS, which typically goes long, warns there is no room for error with Globant."

In conclusion, StreetSweeper projects a drop to $17/share, "still an exceptionally fair valuation for no-longer-glitzy Globant."

At time of writing, Globant was up 3.16 percent at $30.98.