Analysts have revised their price targets for CGI downward. The consensus fair value has decreased by approximately C$4 to C$166.83, citing shifting profit margin expectations and evolving opportunities in artificial intelligence as key factors.

Analyst Commentary

Recent updates from Street research highlight analysts' divided but nuanced outlook for CGI, reflecting both optimism about the company’s long-term potential and caution regarding near-term execution risks.

Bullish Takeaways

• Bullish analysts expect generative artificial intelligence to create greater opportunities for CGI, potentially enhancing its service offerings and supporting future growth.
• Recent removal of tariff uncertainties is seen as an immediate relief. There are expectations that this could help reverse organic revenue declines and improve operating momentum.
• Some valuations have modestly increased, with price targets raised in anticipation of improved profitability and execution on growth initiatives.
• Overall, the consensus maintains a positive recommendation on the stock, underscoring confidence in CGI’s long-term strategic positioning.

Bearish Takeaways

• Bearish analysts have revised their price targets downward, citing cautious expectations for future profit margins as a reason for tempering enthusiasm.
• Despite positive views on AI, there is concern that execution risks may limit the pace at which CGI can capitalize on new technological opportunities.
• While tariff risks have eased, underlying market uncertainties and recent organic declines remain key monitoring points for cautious investors.

What's in the News

• CGI secured a new 10-year contract with the State of New Jersey to continue supporting and modernizing its State Integrated Recovery Operations Management Systems (SIROMS), a platform that has managed over $7.2 billion in natural disaster recovery funds. (Client Announcements)
• The company was awarded a contract by the Texas Comptroller of Public Accounts to implement a modern enterprise financial system. This will replace multiple legacy state accounting systems with CGI Advantage®, a comprehensive SaaS ERP solution. (Client Announcements)
• CGI received a three-year, USD 200-million contract extension with the State of California to continue managing the Case Management, Information and Payrolling System (CMIPS). This program benefits over 850,000 recipients and 760,000 caregivers. (Client Announcements)
• From April to June 2025, CGI repurchased nearly 2 million shares for a total of CAD 286.2 million as part of its ongoing buyback program. (Buyback Tranche Update)
• During Q3 FY2025, CGI stated it has $2.7 billion available to fund its profitable growth strategy. The company is actively pursuing acquisitions to strengthen its position. (Seeking Acquisitions/Investments)

Valuation Changes

• Consensus Analyst Price Target (Fair Value): Decreased moderately from CA$171.17 to CA$166.83, reflecting recent adjustments to expectations.
• Discount Rate: Increased slightly from 8.13% to 8.28%, indicating a modest rise in the perceived risk of future cash flows.
• Revenue Growth: Increased from 4.83% to 6.14%, suggesting analysts have become more optimistic about future top-line expansion.
• Net Profit Margin: Declined from 12.84% to 11.92%, signaling reduced confidence in near-term profitability.
• Future P/E Ratio: Moved higher from 19.46x to 19.78x, indicating a small upward adjustment in valuation multiples despite the margin changes.