Cormark analyst Richard Tse attended the event and shared his thoughts in an update to clients Friday.
Tse says at current prices, Open Text has become a polarizing name. Some investors, he notes, are not keen on Open Text’s organic growth strategy. Though a major part of the Waterloo company’s historical growth has come from acquisitions, the Cormark analyst says anecdotal discussions with customers suggest there a surprising room for organic growth. In fact, he says, some suggest there spending increases could be as high as 20-30%. In Friday’s update, Tse reiterated his TOP PICK rating and $85 target price on Open Text.
Open Text, which last year joined Waterloo peer Research in Motion in surpassing a billion dollars in revenue, sells software that enables companies to manage their content. The company’s various product offerings exist under a parade of acronyms that relate to the way companies use their content to collaborate and engage clients and meet regulatory requirements. These include Enterprise Content Management (ECM), Enterprise Information Management (EIM), Customer Experience Management (CEM) and Business Process Management (BPM). The company now has more than 5000 employees in 31 countries.
Tse says most Open Text customers use its product suite for records management, archiving, and for regulatory reasons. One trend he has noticed, however, is that many organizations are embedding Open Text into business processes with larger partners such as Oracle, SAP and Microsoft. Tse says countless customers told him they use Open Text underneath the leading collaborative platform, Microsoft Sharepoint, because it has limitations when it comes to scale and specific industry applications.
Shares of Open Text on the TSX closed Friday up .1% to $53.35.