The valuation gap between CGI cluster (TSX:GIB.A) and its additional expensively priced peers can begin to tighten as a result of the worth creation from its “contrarian” acquisition of Logica can ultimately surmount expectations, says Cormark analyst Richard Tse.
Next weekday, before market open, CGI can report its Q3, 2014 results. the corporate is returning off a Q2 within which it announce earnings of $229.6 million on revenue of $2.7-billion, up seven-membered from last year’s second quarter topline.
Tse says that at one.2x EV/Sales, 10.6x P/E, and 7.2x EV/EBITDA, supported his business 2015 estimates, CGI remains undervalued. He believes the Logica integration can still reveal synergies against a background of improvement within the European macro image. “The stock’s valuation on C2015 EPS is twenty fifth below a broad comparable cluster of IT Services names that embrace European and government/defense-focused firms,” he says.
For the coming third quarter, Tse thinks CGI can generate operational EPS of $0.74 per share on revenue of $2.8-billion, basically in-line with accord expectations. The Cormark Associate in Nursingalyst believes an accelerated debt-repayment schedule may presently place CGI in position to pursue another “sizable” acquisition.
In a analysis update to shoppers this morning, Tse reiterated his “Buy” recommendation and $45.00 annual target on the stock.
