CGI Federal secures spot on $2 billion cloud services contract

FAIRFAX, Va. - CGI Federal Inc., a subsidiary of CGI Inc. (NYSE: GIB) (TSX: GIB.A), has secured a position on a 10-year, $2 billion Indefinite-Delivery, Indefinite-Quantity (IDIQ) contract with the U.S. Department of the Interior. This contract, known as the Foundation Cloud Hosting Services II (FCHS2), will enable CGI to provide a variety of cloud services and solutions to support the federal government's modernization efforts.

The company's Senior Vice-President, Jay Hadley, emphasized CGI's role as a strategic partner in aiding federal clients with modernization initiatives through cloud services. CGI Federal aims to help clients transition to more adaptive and resilient operations. The company's approach includes specialized Software-as-a-Service (SaaS) offerings, cloud IT strategy leadership, and cybersecurity consulting.

Vishal Ranjan, CGI Vice-President, highlighted the company's commitment to delivering digital solutions that reduce risk and procurement timelines for federal clients. CGI's in-depth knowledge of federal technology architecture has contributed to its status as a leading provider of cloud services to the federal government since its first Foundation Cloud Hosting Services IDIQ award in 2014.

CGI Federal was also recently recognized as a Leader in the IDC MarketScape: U.S. Federal Government Cloud Professional Services 2024 Vendor Assessment, reinforcing its position in the market.

CGI Inc., the parent company of CGI Federal, is one of the largest independent IT and business consulting services firms globally. With 90,000 consultants and professionals worldwide, CGI Inc. offers a comprehensive range of services, including strategic IT and business consulting, systems integration, managed IT and business process services, and intellectual property solutions. The company reported C$14.30 billion in revenue for Fiscal 2023.

This announcement is based on a press release statement and reflects CGI Federal's ongoing efforts to support the U.S. government's digital transformation and modernization initiatives.

In other recent news, CGI Group (NYSE:GIB) Inc. has reported a year-over-year revenue growth of 1.3%, reaching $3.7 billion. Notable performance was seen in the government sector and intellectual property services, with strong bookings at $4.3 billion. The company also announced the initiation of a quarterly dividend of 15 cents per share, set to commence in the first quarter of fiscal year 2025. Canaccord Genuity maintained a positive outlook on CGI Group shares, raising the price target to C$170 from the previous C$155. CGI Group Inc 's subsidiary, CGI Federal Inc., secured two significant contracts from the U.S. Patent and Trademark Office totaling approximately $119 million. These contracts aim to enhance operational efficiency, maintenance, and security services. Additionally, CGI Group Inc. announced strategic acquisitions and the integration of generative AI into its offerings. These recent developments indicate CGI Group's commitment to its shareholders and its momentum in the IT services landscape.

InvestingPro Insights

CGI Inc.'s recent contract win with the U.S. Department of the Interior aligns well with the company's strong market position and financial performance. According to InvestingPro data, CGI boasts a market capitalization of $25.77 billion USD, reflecting its significant presence in the IT services industry. The company's revenue for the last twelve months as of Q3 2024 stood at $10.61 billion USD, with a modest growth of 3.47% over the same period.

InvestingPro Tips highlight CGI's financial strength and market position. The company has a perfect Piotroski Score of 9, indicating robust financial health. This score is particularly relevant given the long-term nature of the $2 billion IDIQ contract, as it suggests CGI has the financial stability to deliver on such significant commitments.

Moreover, CGI's management has been aggressively buying back shares, which could be seen as a sign of confidence in the company's future prospects. This aligns with the company's strategic positioning in the federal cloud services market, as evidenced by its recognition in the IDC MarketScape report.

The company's P/E ratio of 21.13 and its trading near its 52-week high suggest that investors are optimistic about CGI's growth potential, likely influenced by contract wins such as the one with the Department of the Interior. However, it's worth noting that 5 analysts have revised their earnings downwards for the upcoming period, which investors may want to monitor.

For those interested in a deeper analysis, InvestingPro offers 12 additional tips for CGI, providing a more comprehensive view of the company's financial health and market position.

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