Scotiabank analyst Divya Goyal has adjusted the price target for CGI (GIB, Financial), lowering it from C$185 to C$175 while maintaining an Outperform rating on the stock. As the company approaches its quarterly earnings announcement, the analyst adopts a cautious outlook, reflecting broader concerns within the Technology Services sector. Given the continuing macroeconomic uncertainties, the firm anticipates subdued growth and a slowdown in bookings momentum across the industry.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 12 analysts, the average target price for CGI Inc (GIB, Financial) is $122.54 with a high estimate of $137.30 and a low estimate of $95.11. The average target implies an upside of 15.24% from the current price of $106.33. More detailed estimate data can be found on the CGI Inc (GIB) Forecast page.
Based on the consensus recommendation from 11 brokerage firms, CGI Inc's (GIB, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for CGI Inc (GIB, Financial) in one year is $113.94, suggesting a upside of 7.16% from the current price of $106.33. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the CGI Inc (GIB) Summary page.
GIB Key Business Developments
Release Date: January 29, 2025
- Revenue: $3.8 billion, up 5.1% year-over-year or 2.7% in constant currency.
- Bookings: $4.2 billion for a book-to-sales ratio of 110%.
- Global Backlog: $29.8 billion, equivalent to 2 times revenue.
- Earnings Before Income Taxes: $592 million, margin of 15.6%, up 100 basis points year-over-year.
- Net Earnings: $439 million, margin of 11.6%, up 80 basis points year-over-year.
- Diluted EPS: $1.92, an increase of 15% year-over-year.
- Cash from Operations: $646 million, representing 17.1% of total revenue.
- Return on Invested Capital: 16.2%, up 30 basis points.
- Dividend: Quarterly cash dividend of $0.15 per share.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CGI Inc (GIB, Financial) reported a revenue increase of 5.1% year-over-year, or 2.7% in constant currency, demonstrating strong financial performance.
- The company achieved a book-to-bill ratio of 110% in Q1, indicating robust demand for its services.
- Net earnings rose to $439 million, with a margin of 11.6%, up 80 basis points year-over-year.
- CGI Inc (GIB) announced a new merger agreement in the UK, expanding its footprint and capabilities in key commercial industries.
- The company continues to generate strong cash flows, with $646 million in cash from operations, representing 17.1% of total revenue.
Negative Points
- European operations reported a revenue decline of 0.8% in constant currency, largely due to slower markets in Germany and France.
- IP revenue represented 21.6% of total revenue, down 40 basis points year-over-year due to recent business acquisitions.
- The company incurred $8 million in costs in Q1 related to restructuring in Europe, with an additional $42 million expected by Q3.
- There is ongoing pressure in the manufacturing sector, particularly in Europe, affecting discretionary spending.
- The effective tax rate increased to 29% from 26.1% last year, impacting net earnings.
