CGI Group. Buy, Sell or Hold?

In a Nov. 5 report titled “Remains Resilient; We Like the Set Up for FY26,” National Bank analyst Richard Tse maintained his “Outperform” rating and C$185.00 target price on CGI (CGI Stock Quote, Chart, News, Analysts, Financials TSX:GIB.A) following what he called a solid fiscal fourth-quarter performance under a challenging macroeconomic backdrop.

CGI reported revenue of $4.01-billion in FQ4’25 (calendar Q3), compared with Tse’s estimate of $4.09-billion and the consensus of $4.05-billion, representing 9.7% year-over-year growth (5.5% in constant currency). Adjusted EPS came in at $2.13, slightly ahead of National Bank’s $2.12 forecast and the $2.10 consensus. EBIT margin improved to 16.6%, up from 16.3% in the previous quarter and 16.4% a year earlier, reflecting the completion of CGI’s restructuring program and early benefits from recent acquisitions.

Tse said the results demonstrate that CGI “continues to execute well despite a tough environment,” and that acquisitions remain the company’s key growth driver. CGI deployed about $1.8-billion in capital toward acquisitions in fiscal 2025, compared with $390-million the prior year, fueling 8.4% revenue growth versus 2.7% in fiscal 2024.

Tse said that while margins typically compress after new acquisitions, “scaling synergies over the next 12 months should drive an inflection in profitability.” He expects acquisition activity to continue given more than $2.4-billion in available liquidity and low leverage.

Tse also pointed to signs of stabilization across CGI’s markets, including a sharp rebound in U.S. Federal bookings, which rose to $1.02-billion in the quarter from $480-million in Q3 and $231-million in Q2.

While some normalization is expected in early fiscal 2026 due to the ongoing U.S. government shutdown, Tse said the sequential improvement “suggests the market is gradually recovering from early-year disruptions.”

Based in Montreal, CGI is Canada’s largest technology company, employing about 90,000 people globally and providing IT consulting, systems integration, and outsourcing services across North America, Europe, and India.

Tse forecasts Adjusted EBITDA of $3.40-billion on revenue of $16.68-billion in fiscal 2026, and said he remains positive on CGI’s margin expansion potential and acquisition-led growth heading into next year.

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