Open Text Explodes On Earnings Beat: Analysts Like What They See
Open Text (NASDAQ: OTEX) is up by 14.88 percent on the Thursday trading session following a blockbuster earnings report that was reported after the bell on Wednesday.
Open Text reported Non-GAAP EPS of $1.05, which compared to analyst consensus Non-GAAP EPS of $0.99. The $0.06 beat came as a result of the company reporting $494 million in revenue (42 percent year-over-year growth), the impact of top line growth directly contributed to the bottom line performance beat.
Source: Open Text
Open Text offered upbeat commentary on the industry, and also mentioned that the total addressable market is quite large:
“EIM represents a $20.9 billion industry expected to grow at a 11.4% CAGR from 2012 to 2017 based on Gartner Forecasts. EIM is comprised of five pillars which include: Enterprise Content Management (“ECM”), Business Process Management (“BPM”), Customer Experience Management (“CEM”), Information Exchange (“iX”) and Discovery.”
Credit Suisse responded to Open Text's earnings report with an upgrade from neutral to outperform, and offered a $65 price target:
“As the product cycle of OTEX's EIM suite bundle gains traction with existing and new customers we believe there is a potential long tail of license revenue growth that can accelerate earnings from the company's core products over the next several qtrs, which could cause investors to assign a higher multiple to the company's shares. At current levels, we view OTEX shares risk / reward as favorable based on the company's NT opportunities for the new EIM suite product cycle and potential to outperform throughout F2015.”
Open Text closed at $55.65 on Thursday. Assuming Credit Suisse price target is correct, the stock has 16.8 percent upside from current levels.
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