Jefferies downgrades CGI Group stock rating to Hold on growth concerns

Investing.com - Jefferies has downgraded CGI Group (NYSE:GIB) stock rating from Buy to Hold, while reducing its price target to $81.00 from $105.00. The stock currently trades at $86.18, just above its 52-week low of $84.24, having fallen over 22% in the past year.

The downgrade reflects CGI Group’s lagging organic growth compared to industry peers, which Jefferies attributes to the company’s greater exposure to underperforming regions and verticals.

Jefferies expressed pessimism about near-term improvement, noting that industry trends are "unlikely to improve much next year" and sees "no relief" for CGI’s growth challenges. This aligns with InvestingPro data showing the company appears undervalued based on Fair Value estimates, despite current headwinds.

For 2026, Jefferies forecasts CGI will experience -2% year-over-year organic constant currency revenue growth, positioning its expectations below the current market consensus. The firm projects adjusted earnings per share will grow 9% year-over-year, primarily driven by mergers and acquisitions activity. InvestingPro data reveals that management has been aggressively buying back shares, while three analysts have recently revised earnings downward.

While Jefferies acknowledges CGI’s 13.3x price-to-earnings multiple on 2026 estimates appears attractive, it notes this valuation remains above the 12.5x peer average, which the firm believes "warrants caution" for investors. The company currently trades at a P/E ratio of 16.29, with a concerning PEG ratio of 28.91, indicating a high valuation relative to growth expectations. Discover 10+ additional insights with InvestingPro’s comprehensive research report.

In other recent news, CGI Inc reported impressive financial results for the fourth quarter of 2025, surpassing market expectations. The company achieved an earnings per share (EPS) of $2.13, well above the projected $1.51. Revenue for the quarter reached $4.01 billion, significantly exceeding the anticipated $2.89 billion. These robust figures highlight CGI Inc’s strong performance in the latest quarter. The positive earnings and revenue results reflect the company’s effective strategies and operations during this period. Investors and analysts are likely to view these results favorably, given the substantial beat on both earnings and revenue. As a result, the company has drawn attention from various financial analysts and stakeholders.

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