Market Overview

UPDATE: Paradigm Capital Downgrades CGI Group to Hold, Raises PT

Share:
Related GIB
The Pentagon Just Awarded Another $293.1 Million In Defense Contracts
City of Vantaa Outsources IT Services To CGI

In a research note published earlier today, Paradigm Capital Inc. downgraded its rating for CGI Group Inc. (NYSE: GIB) from Buy to Hold, but slightly raised its price target from $24.00 to $25.00, related to CGI's recent announcement of its intention to acquire Logica plc.

Paradigm Capital went on to say “Overall, we view this announcement as being transformational for CGI, which significantly increases its geographical reach and scale. At the same time, we believe there are potential challenges associated with Logica, in particular the lower‐margin profile associated with European IT services vendors, the fact this is a relatively new geographic area for CGI (i.e., execution risk), along with the current macro uncertainty in the region. Based on our initial assessment, we believe the combined entity could generate earnings of ~$2.50/sh in FY13 (ending September 2013). At 8x EV/EBITDA, which his Accenture's (ACN–N, NR) current trading multiple, we derive a pro forma value of $27.50 for CGI. However, we feel a discount (~10%) is warranted given the uncertainty about whether CGI will be successful in this bid (Logica is already trading above the takeover bid).”

CGI Group Inc. closed yesterday at $23.95.

Latest Ratings for GIB

DateFirmActionFromTo
Jan 2015JefferiesDowngradesBuyHold
Jan 2015BarclaysMaintainsOverweight
Nov 2014BarclaysInitiates Coverage onOverweight

View More Analyst Ratings for GIB
View the Latest Analyst Ratings

Posted-In: Paradigm CapitalAnalyst Color Downgrades Price Target Analyst Ratings

 

Related Articles (GIB)

Around the Web, We're Loving...

Get Benzinga's Newsletters

Our Experts vs. S&P 500Powered by Benzinga
Marketfy Products Return S&P 500
Morning Profit Maker 42.72% 6.69%
The Option Prophet 91.14% 6.69%
SecretCaps 26.55% 6.69%
Short-Term Trend Trading 11.89% 6.69%
View the highest rated products→