Despite the diminished bottom line, CGI President and CEO Michael Roach was upbeat about the company’s prospects, saying: “We continue to identify and shape additional profitable growth opportunities across all our vertical markets. Our strong cash generation continues to enable us to further reducing debt and repurchase our shares.”
Versant analyst Tom Liston is also optimistic about the way the second half of 2012 is shaping up for Canada’s largest IT stock. He believes several deals that slipped through the cracks in the first half of the year will be booked in the second, and that the general business atmosphere for CGI has improved. In a research update to clients today, Liston maintained his BUY rating and increased his twelve-month target on CGI to $25.00 from his previous target of $24.50.
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CGI was founded in Montreal in that city’s Olympic Year of 1976, and has since grown to more than $4.2-billion in revenue. The Company’s name is an acronym for Consultants to Government and Industry. Midway through 2010, CGI completed the largest acquisition in its history, picking up Stanley, an Arlington, Virginia based systems integrator for a billion dollars. Since that time, CGI’s focus on the government part of its namesake has sharpened in the US, with US government vertical growing nearly 60%. after Stanley was fully integrated.
The US part of CGI’s business could give them a bump going forward, says Liston. While noting that the company’s order backlog was down to $13.1-billion from $13.6-billion Liston says, for accounting purposes, CGI does not include its share of US government task orders as part of backlog number. Liston says there were twelve new vehicles in the quarter representing (US) $5.6-billion in work that were each recorded as one dollar each.
Shares of CGI Group closed up 5.2% to $21.50 today.