RBC lifts CGI Group stock price target to $192 from $178

On Thursday, RBC Capital Markets adjusted their financial outlook on CGI Group (NYSE:GIB), increasing the price target to $192.00, up from the previous $178.00, while keeping a positive Outperform rating on the shares. The adjustment comes after CGI Group, now valued at $26.26 billion, reported its fiscal first-quarter results, which were largely consistent with market expectations. According to InvestingPro data, seven analysts have recently revised their earnings estimates upward for the upcoming period, suggesting growing confidence in the company’s prospects.

CGI Group’s organic growth for the quarter fell short of projections, but RBC Capital analysts anticipate that strategic mergers and acquisitions (M&A) will more than compensate for this slower pace. As a result of the company’s recent acquisitions, the analysts have slightly raised their adjusted earnings per share (EPS) estimates for CGI Group.

The analysts emphasized CGI Group’s proven strategy for generating value, noting that the company’s strong free cash flow (FCF) positions it to pursue M&A activities that have historically been the main driver of its growth. The new price target of $192.00 reflects the anticipated contributions from these acquisitions to the company’s financial performance.

CGI Group’s latest financial disclosure reiterates the effectiveness of its business model, which leverages robust FCF to enable growth through M&A. This approach has been a cornerstone of the company’s strategy and is expected to continue playing a key role in its development.

In summary, RBC Capital has raised the price target for CGI Group to $192.00 from $178.00, maintaining an Outperform rating. This change is based on the company’s consistent financial results and a strategic focus on growth through acquisitions, which is projected to outweigh slower organic growth.

In other recent news, CGI Group Inc . has been the subject of significant financial developments. Bernstein analysts have raised the company’s stock price target to C$144, despite maintaining an Underperform rating. This adjustment follows the recent announcement of a restructuring plan by CGI Group, which is projected to exceed initial cost expectations.

CGI Group has also recently reported first quarter results that surpassed analyst expectations. The IT services provider recorded adjusted earnings per share of C$1.97, outperforming the anticipated C$1.40, and revenue of C$3.79 billion, surpassing a forecast of C$2.68 billion. These figures indicate a year-over-year revenue growth of 5.1% and an increase in earnings before income taxes of 12.3% to C$591.7 million.

Furthermore, CGI Group generated C$646.4 million in cash from operations during the quarter, representing 17.1% of revenue. The company also repurchased 927,599 shares for C$143.2 million under its share buyback program. Additionally, CGI Group initiated restructuring actions in Europe, primarily in Germany, incurring C$8.3 million in costs this quarter, with an additional estimated C$42 million expected by Q3 fiscal 2025.

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