RBC Capital Markets on Friday reduced Open Text's (OTEX.TO) price target to US$27 from $30 with a sector perform rating to reflect reduced software valuations.
The company's revenue of $1.28 billion in its fiscal third quarter matched RBC and consensus estimates, while its adjusted EBITDA of $438 million exceeded RBC's forecast of $423 million and the consensus estimate of $422 million.
Open Text's adjusted earnings of $1.01 per share beat RBC's projection of $0.94 per share and the consensus estimate of $0.92 per share.
"Cloud revenue, bookings and profitability were better than expected," RBC said. "However, non-core and non-cloud segments continue to decline and divestitures of non-core segments appear delayed."
"Investor sentiment is likely to remain soft, pending stronger organic growth," RBC added.
Open Text traded at $23.78 per share at last look on Nasdaq.
Price: $32.52, Change: $+0.17, Percent Change: +0.53%