National Bank Financial upgrades Open Text stock rating to Outperform

Investing.com - National Bank Financial upgraded Open Text (NASDAQ:OTEX) from Sector Perform to Outperform and raised its price target to $45.00 from $34.00. The stock, currently trading at $35.68, has demonstrated strong momentum with a 39.34% return over the past six months and is approaching its 52-week high of $35.95.

The upgrade follows meetings between National Bank Financial and Open Text Executive Chair and Chief Strategy Officer Tom Jenkins, where they discussed the company’s strategy with investors.

National Bank Financial believes Open Text presents a renewed investment opportunity in two stages, with the first stage expected to bring catalyst-rich developments over the next three to six months that could drive a valuation re-rating.

The second stage involves what the firm describes as a "quietly developing AI play" leveraging Open Text’s core strength in content management and enterprise data, which could potentially lead to a more substantial valuation increase in the longer term.

National Bank Financial noted that these prospects collectively support their decision to upgrade the stock, viewing Open Text as a "compelling and easier to understand, developing growth story."

In other recent news, OpenText’s stock price target has been raised by both RBC Capital and Scotiabank to $35 from $30, reflecting positive sentiment around the company’s potential for growth. RBC Capital maintains a Sector Perform rating, suggesting an upward valuation re-rating for OpenText shares, while Scotiabank’s adjustment comes on the heels of OpenText’s Q4 results and a fiscal year 2026 outlook projecting cloud growth of 3%-4%. Meanwhile, Jefferies downgraded OpenText’s stock rating to Hold from Buy, citing leadership changes, including the departure of CEO Mark Barrenechea and CFO Chadwick Westlake, as a factor in their decision. In other developments, OpenText has expanded its collaboration with Hewlett Packard Enterprise by joining the HPE Unleash AI partner program to accelerate enterprise artificial intelligence adoption. This partnership aims to integrate OpenText Aviator AI solutions with HPE’s enterprise AI platform. Additionally, a study by Canalys highlights that managed service providers using OpenText’s cybersecurity solutions can achieve a return on investment of up to 6.7 times. These recent developments showcase a mix of strategic partnerships and internal changes that could impact OpenText’s future trajectory.

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