Analysts are favouring this Canadian tech stock

Canadian technology stocks have had a little jump in their step of late, with the sector rising about 18 per cent over the fourth quarter so far in comparison to the broader S&P/TSX Composite Index which is up about eight per cent for that period.

Overall, though, 2022 was definitely one to forget for tech stocks, with most names remaining underwater, including industry favourites like Shopify and OpenText, both of which have gone for big losses this year. 

But the same can’t be said about IT consulting giant CGI Inc (CGI Inc Stock Quote, Charts, News, Analysts, Financials TSX:GIB.A). In the red for much of the year heading into November, GIB.A has moved ahead in recent weeks, going from the $100 mark as late as September to now above $115 per share, which puts it into positive territory for the year at about four per cent year-to-date. That’s not bad considering, say, a loss of over 70 per cent for Shopify.

And analysts are predicting more upside to CGI in the new year. According to a recent Globe and Mail report, of the 13 analysts who provided recent updates on the company and stock, the average one-year target is now at $130, with the low-end target at $117 and the high end at $140 per share.

After CGI’s latest quarterly report, the company’s fiscal fourth quarter 2022, released in early November, National Bank Financial analyst Richard Tse reiterated an “Outperform” rating and $135.00 target price, good for a projected return of 23.4 per cent at the time of his report’s publication.

Tse said CGI has the potential to increase its M&A activity in 2023, while organic growth has been showing positive indicators, including an increase of four per cent year-over-year in the fiscal Q4.

“Bottom line, despite macro headwinds which have the potential to moderate spend on digital transformation projects in the near term, we believe CGI’s market position and operating prowess offer outsized resilience in the current market and as such, we see the name offering a relative opportunity in a volatile (tech) market,” Tse wrote.