UPDATE: Desjardins Upgrades CGI Group to Buy, Raises PT

In a report published earlier today, Desjardins Capital Markets upgraded its rating for CGI Group Inc.

from Hold to Buy and slightly raised its price target from C$23.00 to C$24.00. Desjardins went on to say “Given the outlook for CGI is more positive for 2H FY12 and FY13, in contrast to its business performance through the latter half of FY11 and 1H FY12, we believe the current share price represents an attractive entry point for investors looking for technology sector exposure. Overall, CGI gives investors exposure to technology without some of the usual risks related to the tech sector, given CGI's large base of recurring revenue and stable margin profile. CGI continues to generate abundant free cash flow, a large portion of which is returned to shareholders via share buybacks while the remainder is retained and reinvested in profitable growth opportunities. We note that given CGI's high and improving ROE metric, we look favourably on the company's decision to reinvest cash flows in its business and create value for shareholders. CGI remains committed to its mantra of a ‘build & buy' strategy; however, we do not explicitly forecast an acquisition and we do not believe a transaction is imminent in the near term.” CGI Group Inc. closed yesterday at US$20.53.