Grid Dynamics Blasts Up on New Stock Offering

Grid Dynamics Blasts Up on New Stock Offering

Grid Dynamics (NASDAQ:GDYN), a company known for staging digital transformation in mainly Fortune 1000 companies, blasted upward just over 25% yesterday on nearly 30 times normal volume after announcing plans for a follow-on public offering. The company added a little over 1% in premarket trading, and this morning's session has been volatile so far as profit-taking briefly warred with further gains. Financial analysts, meanwhile, are encouraging further buying and have been doing so for over a year now.

A New Offering Leads New Advances for Grid Dynamics

Grid Dynamics' plan for its follow-on offering looks for a combined total of 10,100,262 shares of common stock to be sold. That includes four million shares from Grid Dynamics itself, and the balance to be made up of stock sold by certain shareholders. The shares in question are set to be sold at $15.03, which, so far, represents a substantial discount over the current price, which approached $20 in trading this morning.

The offering's closing is set to take place July 6, though will be subject to “customary closing conditions.” Grid Dynamics won't be receiving any proceeds from the shares sold by stockholders, however. Additionally, both Grid Dynamics and the shareholders extended a 30-day option to the underwriters of the sale, offering another 1,470,039 shares from Grid Dynamics and another 45,000 shares from stockholders should the option be exercised.

The news comes at a good time for Grid Dynamics, as word emerged about its likely sales for the current quarter. New reports from Zacks note that Grid Dynamics is likely to report $41.4 million in sales, an average of two projections of $41.3 million and $41.5 million.

Should that number materialize when the next earnings report comes out August 5, that would represent a year-to-year growth rate of just over 85%. Zacks also note analysts are expecting full-year sales of $165 million, and $198.1 million for the next fiscal year. The last earnings report for Grid Dynamics offered beats on earnings and revenue as well, so another such beat here is quite possible.

What are Financial Analysts Saying About Grid Dynamics Holdings Stock?

The word so far has been very positive around Grid Dynamics Holdings stock, and the word from financial analysts won't rain on that parade. Grid Dynamics is currently rated a consensus “buy”, and that rating has been in place since April 2020.

A year ago, the company had four “buy” ratings to its credit. Six months ago, that was up to seven “buy” ratings. Today, it's down to five “buy” ratings, but unanimous is unanimous even if a couple ratings depart the field.

The Grid Dynamics price target, meanwhile, is in a very narrow range. The current average target is $17.75, with a high of $22 and a low of $15 making up the field overall. The low is actually somewhat dated, too; it came back in December 2020, when Canaccord Genuity boosted the target from $11 to $15.

Virtually every action for Grid Dynamics has been positive so far. Going back a year, analysts have either raised their price targets, initiated coverage at a “buy”, or reiterated “buy” ratings. The latest ratings, generated back in May, featured Needham and Company. upgrading its price target from $20 to $22. Cantor Fitzgerald, meanwhile, reiterated its “overweight” rating on the company. Interestingly, both Needham & Company and Cantor Fitzgerald will be acting as co-managers for the upcoming release of stock.

Also, less formal analysis suggests positive news as well. Several hedge funds have been spotted increasing holdings in Grid Dynamics. BlackRock Inc. owns nearly three million shares right now, raising its stake by just under 8%. Bank of New York Mellon Corp., meanwhile, drove its stake upward almost 26% in the fourth quarter, and Wells Fargo tacked on nearly another 10%.