Despite a run-up in its shares since a major acquisition a year ago, CGI Group (CGI Group Stock Quote, Chart, News: TSX:GIB.A) is still a buy, says one fund manager.
John Wilson, Co-Chief Investment Officer and Senior Portfolio Manager at Sprott Asset Management was on BNN’s “Market Call” yesterday and talked about Canada’s largest tech stock.
Wilson says CGI has great leverage into Europe because of last year’s massive acquisition of Logica. He says the company’s management team has a good track record of integrating acquisitions, pointing to the pickup of Virginia-based Stanley a couple years ago.
“We continue to think the company can deliver numbers that are ahead of estimates, driven by a slow recovery in the European fundamentals at Logica and better synergies on the integration,” says the Sprott fund manager.
Wilson says he wouldn’t sell CGI right now, but instead would wait for the stock to hit the mid-forty range, implying about 17% upside from current prices.
“All the reasons why we wanted to own the company are still true for us today,” says Wilson.
On July 31st, CGI Group reported its Q3, 2013 financials. The company earned $178.2-million on revenue of $2.57-billion, up 141% over 2012’s Q3 topline.
CGI closed the $3.3-billion acquisition of London-based IT company Logica a year ago. The Montreal-based company is now the sixth-largest IT services provider in the world, and has surpassed BlackBerry as Canada’s most valuable technology stock.
At press time, shares of CGI Group on the TSX were up .5% to $34.91.
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