CGI Group (GIB) Stock Forecast & Price Target

CGI's managed services revenue demonstrated robust growth, rising 11% year-over-year to $2.22 billion, highlighting the company’s strong performance in the IT services sector. Additionally, on a trailing twelve months (TTM) basis, CGI reported free cash flow of $1.8 billion, reflecting a 1% increase year-over-year, while free cash flow per share grew by 3% year-over-year. This solid financial performance underscores CGI's ability to generate cash and maintain a healthy financial position within its embedded markets in North America and Europe.

CGI's financial outlook appears negative due to a decline in margins, which decreased by 10 basis points year-over-year to 16.3% in Q3, primarily attributed to the dilutive impact of recent acquisitions. Additionally, the company experienced a sequential decline in bookings, although this was in line with estimates, signaling potential challenges in sustaining revenue growth. Furthermore, intellectual property (IP) as a percentage of total revenue remained flat at 21% from the previous quarter, down from 23% in Q3 of the prior fiscal year, indicating weakening revenue contributions from its IP offerings.