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National Bank Says Sudden Leadership Change Suggests Board Disappointment With "Underperformance", But Adds "Quick Pivot" Is "Positive"

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The sudden appointment of Tim Hurlebaus as President and CEO and member of the board at CGI (GIB-A.TO, GIB), effective immediately, "suggests the board's disappointment with CGI's underperformance", National Bank said Tuesday.

While the CGI stock performance is unlike its peer group, it appears the company is looking to reset the narrative around growth, acquisitions, and AI with new leadership, the bank added, noting Hurlebaus has a track record of more than 35 years in IT consulting (20+ years with CGI), overseeing major segments for CGI such as U.S. Federal (President for six years), U.S. Commercial and State Government (President for nearly four years), and more recently the U.S., the U.K., and Australia operations as COO. "In particular, it appears he comes with deep operating and client facing experience, attributes that are essential to the current environment, particularly as it relates to potential AI disintermediation," National Bank said.

Bottom line for National Bank, it added "while the move reflects the challenges and likely disappointment in CGI's recent performance, the quick pivot is positive in that the company is recognizing the need for change, and it would appear Hurlebaus has the attributes to address the current market changes, in particular, his deep client facing experience."

National Bank continues to believe CGI is a premium operator with a compelling valuation (6.4x EV/EBITDA on FY26E). It maintains an Outperform and C$150 DCF-based price target (unchanged), which implies a valuation of 10.2x EV/EBITDA (unchanged) on its FY26 estimates.

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