Analysts have reduced their average price target for CGI from approximately C$167 to C$164, citing tempered growth expectations. Recent research highlights both ongoing sector opportunities and a more cautious outlook on valuation.

Analyst Commentary

Recent analyst updates reflect a reassessment of CGI's valuation and growth drivers. The firm's outlook is shaped by both optimistic and cautious perspectives on its market position and strategic initiatives.

• Analysts remain positive on CGI's ability to capitalize on the growing potential of generative artificial intelligence. They view this development as a significant opportunity for long-term expansion.
• Resolution of previous tariff uncertainties is expected to provide a clearer operational environment, which could help reverse recent organic declines in the business.
• Some maintain their favorable ratings despite reduced price targets, which signals confidence in the company's underlying execution and resilience in the sector.
• CGI's diversified service offerings are considered well-positioned to benefit from ongoing digital transformation trends across industries.

• Lowered price targets reflect tempered expectations for CGI's near-term growth, as current valuations are seen as less compelling by some analysts.
• There is increased caution regarding the pace of organic recovery, particularly as specific sector headwinds persist.
• Ongoing recalibration of ratings and targets suggests the market may require clearer evidence of accelerating revenue growth before rewarding the shares with higher multiples.

What's in the News

• CGI secured a 10-year contract with the State of New Jersey for the continued development and support of the State Integrated Recovery Operations Management Systems (SIROMS). This initiative will enhance disaster recovery and fund management for the state. (Key Developments)
• The renewed New Jersey partnership will provide ongoing innovation in natural disaster technology and accountability, enabling efficient distribution of more than $7 billion in recovery funds and supporting thousands of residents. (Key Developments)
• CGI announced a new multi-year contract with the Texas Comptroller of Public Accounts to implement a cloud-based enterprise financial management system. This system will replace multiple legacy state systems and improve analytics and compliance. (Key Developments)

Valuation Changes

• Fair Value Estimate has decreased slightly from CA$166.83 to CA$163.58, reflecting more conservative expectations.
• Discount Rate has increased marginally from 8.28% to 8.31%, suggesting a modest rise in perceived risk or required return.
• Revenue Growth forecast has risen minimally from 6.14% to 6.16%, pointing to a marginally stronger growth outlook.
• Net Profit Margin projection has edged down from 11.92% to 11.91%, indicating expectations for stable profitability levels.
• Future Price/Earnings (P/E) Ratio has declined from 19.78x to 19.40x, signaling modestly lower valuation expectations for future earnings.