CGI wins price target raise at National Bank

Following the company’s third quarter results, National Bank Financial analyst Richard Tse has raised his price target on CGI (CGI Stock Quote, Chart, News, Analysts, Financials TSX:GIB.A).

On July 31, CGI reported its Q3, 2024 results. The company posted Adjusted EBIT of $60.28-million on revenue of $3.67-billion, a topline that was up 1.3% over the same period a year prior.

The analyst summarized the quarter.

“CGI reported essentially in-line FQ3 (CQ2) results this morning. We estimate organic growth in the quarter was essentially flat to slightly negative in constant currency — that’s positive against what’s been a challenging backdrop for IT Services. More importantly, the leading indicator of bookings (and book-to-bill) pointed to a positive outlook. In particular, we’d note Managed Services (recurring revenue) book-to-bill came in at 1.39x.”

In a research update to clients July 31, Tse maintained his “Outperform” rating on CGI and raised his price target from $175.00 to $185.00, implying a return of 17.5% at the time of publication.

The analyst thinks CGI will post EBITDA of $2.97-billion on revenue of $14.6-billion in fiscal 2024. He expects those numbers will improve to EBITDA of $3.15-billion on revenue of $15.3-billion in fiscal 2025.

“Bottom line, despite what has been a soft (macro) enterprise spend backdrop, CGI has been able to drive operating leverage, a reflection of its operating prowess that should benefit from scaling revenue via organic and acquisition initiatives,” Tse added.