Waterloo’s OpenText (TSE:OTEX, Nasdaq:OTEX) has a long history of making acquisitions to grow the company and Industrial Alliance Securities analyst Blair Aberbethy says he expects that trend will continue with the company’s upcoming first quarter results.
On Thursday, November 2, OpenText will report its Q1, 2018 results. Abernethy expects the company will earn $0.55 on revenue of $632.7-million, a touch better than the street consensus of earnings of $0.54 on a topline of $628.4-million.
Abernethy says he thinks pickups like Dell EMC’s Enterprise Content Division (ECD), which OpenText acquired at the beginning of 2017, will drive the quarter.
“We expect to see OpenText show further positive progress with recent acquisitions and remain positive on the stock heading into the quarter, the analyst says. “This quarter, we will also be watching for signs of traction with the recently released Suite 16 upgrade, reported maintenance lift as 2016 acquisitions anniversary, interest in the new Magellan AI platform, and further traction with OpenText partners, particularly SAP. We believe the macro environment has been stable for OpenText in Q1/F18 and expect to see good internal integration progress with ECD.”
In a research update to clients today, Abernethy maintained his “Buy” rating and one-year price target of (U.S.) $38.00 on OpenText, implying a return of 11.1 per cent at the time of publication.
Abernethy thinks OpenText will generate EBITDA of $892.0-million on revenue of $2.71-billion in fiscal 2018. He expects those numbers will improve to EBITDA of $963.0-million on a topline of $2.79-billion the following year.