Computer Modelling Group downgraded at Ventum

Ventum Capital Markets analyst Amr Ezzat downgraded Computer Modelling Group (Computer Modelling Group Stock Quote, Chart, News, Analysts, Financials TSXV:CMG) to “Neutral” from “Buy” on May 22, cutting his price target to $9.00 from $14.00 and warning that “we expect the stock to remain range-bound over the coming quarters.”

Reduced visibility and a softer outlook prompted Ezzat’s move.

He approached CMG’s Q4 fiscal 2025 cautiously, a view that proved justified as the company posted weaker-than-expected results. Revenue came in at $33.7-million and EBITDA at $10.5-million, falling short of both consensus estimates ($36.0-million and $11.8-million) and Ventum’s more conservative forecasts ($34.8-million and $11.2-million).

More concerning than the earnings miss, Ezzat noted, was the decline in disclosure.

“Segment-level details – elements that had become standard in CMG’s MD&A since it began making acquisitions – were absent. While the President’s letter reaffirmed the outperformance of the acquired businesses relative to legacy solutions, the lack of granularity makes it more difficult to track the pace and effectiveness of that transition.”

Ezzat believes the operational weakness is multi-faceted and more pronounced than expected.

“The U.S. CCS market has cooled, with many tax-incentive-driven feasibility studies (under the IRA) not renewing,” he said. “Smaller operators are under pressure, and customers are increasingly rationalizing software spend across vendors. Meanwhile, professional services revenue is expected to decline by $6–7M in F2026, simulation growth visibility has deteriorated faster than anticipated, and while Seismic is a bright spot, it still represents a smaller portion of the mix.”

The analyst expects the company to generate $44.0-million in Adjusted EBITDA on $129.4-million in revenue for fiscal 2025. He projects those figures will dip slightly to $42.5-million in EBITDA on $126.2-million in revenue in 2026, before rebounding in 2027 to $47.2-million in EBITDA on $132.6-million in revenue.

Ezzat said the stock reaction likely reflects more than just the earnings miss; it also signals investor concern over reduced disclosure and a weakening simulation outlook. With Q1 and Q2 expected to be seasonally softer and recurring revenue needing to grow 7–8% just to offset declining services revenue, he believes the stock will likely remain range-bound in the near term.

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