$CMG.TO

CIBC Confirms Neutral Rating and Target of $5.00 on Computer Modelling After Q4 Results

CIBC Capital Markets maintained its neutral rating and target price of $5.00 on the shares of Computer Modelling Group (CMG.TO) after the company reported its fiscal fourth-quarter financial results on Thursday.The bank views the company's Q4 as a "constructive step forward". It noted recurring organic revenue returned to positive territory, supported by new software revenue following the transition of CMG's contract with Shell for CoFlow from a professional services-based development contract to a multi-year software licensing agreement."While Q4 performance was encouraging, execution is still key, and guidance for F2027 indicates CMG remains in a period of transition," said analyst Erin Kyle. "The current oil price environment looks increasingly constructive for CMG, and we expect the company could benefit over the medium-term as more countries look to increase oil production through new exploration or by revisiting older assets."CIBC revised its fiscal 2027 estimates lower to reflect lower year-over-year Professional Services revenue and stable year-over-year organic recurring revenue compared to fiscal 2026, which it expects will be back half weighted. It has also rolled forward its estimates to fiscal 2028, and now expects revenue to decline by -0.1% in fiscal 2027, and grow by 3.7% in fiscal 2028.(covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www..com/contact-us)Price: $4.05, Change: $+0.11, Percent Change: +2.79%

Computer Modelling Group Reports Slightly Higher Earnings In Q4, With Revs Flat

Computer Modelling Group (CMG.TO) on Thursday reported slightly higher earnings in the fourth quarter, with revenues flat, and said "performance" is expected to be weighted to the second half of the year while its goal is to shift the revenue mix towards a higher percentage of software revenue and it expects to make targeted investments in Fiscal 2027 in two areas.For Q4, the global software and consulting company said net income was C$5.4 million, compared to $5.1 million in the corresponding year-ago quarter. Earnings per share, basic and diluted, for the quarter was $0.07 per share, compared to $0.06 per share in the year-ago quarter.Q4 total revenue remained flat at near $33.7 million, added the company, citing 5% organic decline and 5% growth from acquisitions.Among other highlights, CMG said Adjusted EBITDA increased by 12% to $11.8 million and Adjusted EBITDA Margin was 35%, compared to 31% in the comparative period. Free Cash Flow increased by 25% to $8.7 million, Free Cash flow per share increased to $0.11 from $0.08.The company's board approved a cash dividend of $0.01 per common share for the fourth quarter, unchanged from the prior quarter. The dividend will be paid on June 15, 2025, to shareholders of record at the close of business on June 5, 2026."We expect organic recurring revenue to be stable for Fiscal 2027, notwithstanding an expectation of negative organic recurring revenue growth in the first quarter. The first quarter is expected to be the final quarter lapping the contract loss incurred in the second quarter of Fiscal 2026. Performance is expected to be weighted to the second half of the year, consistent with the seasonal pattern evident in Fiscal 2026 in which approximately 55% of recurring revenue was recognized in the third and fourth quarters of the fiscal year."Professional services revenue will reflect an approximate $6 million comparative headwind in Fiscal 2027 relative to Fiscal 2026. The decline is expected to be attributable to CoFlow related development funding that was recognized as professional services revenue during Fiscal 2026 but ended in the third quarter, the continued planned reduction in non-core professional services activity at Bluware, partially offset by positive contributions from Rose Subsurface. It is a goal of the company to shift the revenue mix towards a higher percentage of software revenue and the reduction in professional services is a natural part of the shift."As it continues down its growth path and executes on its capital allocation strategy, the company continues to actively explore transaction opportunities and engage in active discussions around potential acquisitions and growth opportunities to increase market share. The company expects to make targeted investments in Fiscal 2027 in two areas: scaling CMG's M&A execution, integration, and shared services capabilities; and advancing product initiatives that we expect to drive long-term Recurring revenue growth. These investments are deliberate and tied to future growth potential. The company does not expect them to result in a reduction in Adjusted EBITDA relative to Fiscal 2026, as the benefit of organic recurring revenue stability and continued acquisition contribution are expected to offset the incremental investment. We expect Free Cash Flow to improve year-over-year in Fiscal 2027, reflecting both improvement in financial management and discipline and the non-recurrence of the elevated capital expenditures incurred in Fiscal 2026."Shares in CMG were down $0.07 or 1.8% at $3.78 yesterday.

Computer Modelling Approved a Cash Dividend of $0.01 per Common Share

Computer Modelling Q4 EPS $0.07, a 17% Increase

Computer Modelling Q4 Total Revenue Remained Flat at $33.7 Million

CIBC Lowers Price Target on Software and Services Stocks

CIBC Capital Markets lowered its price target on eight software and services stocks ahead of Q1 results for the sector."We expect high single-digit growth in revenue and EBITDA within our coverage in Q1, despite AI-disruption concerns that have reduced the market cap of our Software coverage by an average of 24% year to date," analyst Stephanie Price said in a note to clients."With limited AI-related read-throughs from near-term earnings, investors have been reducing multiples and rethinking terminal values," Price said."For Q1, we are roughly in line with consensus expectations," the analyst said. "We expect a volatile earnings season and a focus on AI narrative for companies that meet or beat consensus expectations.""We expect that earnings misses could result in outsized market reactions," Price said. "That said, with an average 8% consensus EBITDA growth expectation for the quarter, we also see the possibility of upside from multi-year valuation lows."Price made the following changes:CGI Inc. (GIB-A.TO) to $112 from $132 (Neutral)Computer Modelling Group Ltd. (CMG.TO) to $5 from $5.50 (Neutral)Constellation Software Inc. (CSU.TO) to $4080 from $4610 (Outperformer)Descartes Systems Group Inc. (DSG.TO, DSGX) to US$116 from US$126 (Outperformer)Docebo Inc. (DCBO.TO, DCBO) to US$28 from US$34 (Outperformer)Kinaxis Inc. (KXS.TO) to $171 from $203 (Outperformer)Open Text Corp. (OTEX.TO, OTEX) to US$27 from US$32 (Neutral)Thomson Reuters Corp. (TRI.TO, TRI) to US$124 from US$140 (Outperformer)(covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www..com/contact-us)