$OTEX.TO

RBC Cuts Open Text's Price Target to US$27 from US$30

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%

Open Text Up 1.3% After Hours as its Fiscal Q3 Profit Jumps, Beats Estimates

Open Text (OTEX.TO, OTEX) was up 1.3% at last look in after-hours Nasdaq trading after the company said Thursday that its fiscal third-quarter profit and revenue rose year over year, beating analysts' estimates.The cloud-computing and AI company's net profit jumped 86% year-on-year to US$172.65 million, or US$1.01 per share, in the quarter ended March 31, up from US$92.85 million, or US$0.82, a year ago. FactSet expected US$0.92 per share.Revenue rose 2.3% to US$1.28 billion from US$1.25 billion. FactSet projected revenue of US$1.28 billion.OpenText's board also declared a dividend of US$0.275 per share, unchanged from the previous quarter. The dividend will be paid on June 19 to shareholders of record as of June 5.The company also said Ayman Antoun became its chief executive, effective April 20."I am delighted to join OpenText at a defining moment for our clients and our industry. Data is a company's most precious natural resource, and OpenText is uniquely positioned to help clients securely unlock the value of that data to solve complex challenges and win," said Antoun. "I am focused on listening and learning, energized by the momentum already built, and the opportunity ahead to drive disciplined execution, strong client outcomes, and sustainable growth"The company's shares were up down US$0.31 at last look at US$2.00 after-hours. They closed up C$0.94 to C$32.35 on the Toronto Stock Exchange.

Open Text Says Ayman Antoun Officially Joins as CEO effective April 20, 2026

Correction: -- Open Text Q3 Total Revenues of US$1.28

Open Text Q1 Total Revenues of US$1.28

Open Text Q1 Total Revenues of US$1.28

RBC Provides its Canadian Technology Q1/CY26 Preview

RBC Capital Markets provided a first-quarter earnings preview for stocks in its Canadian Technology coverage universe on Friday.The S&P/TSX Info-Tech sub-sector had its "worst start to the year" since 2022, due to the continued downward re-rating of software stocks on concerns regarding AI disruption, noted RBC.While RBC expects Q1 results to be "largely in line" with consensus and believes the "magnitude of the pullback in software valuations is an overreaction," it believes sentiment is unlikely to materially change in the short term.Even though RBC anticipates "slightly improved organic growth" for the average stock in its coverage this quarter, the market appears "risk-averse and may largely ignore positive surprises and disproportionately penalize negative surprises," in light of the market sensitivity regarding AI disruption and uncertainty regarding the macro environment, said RBC.Among its covered stocks, RBC believes the "best-positioned stocks" for calendar Q1 results are Celestica (CLS.TO), Shopify (SHOP.TO), Constellation Software (CSU.TO), and Kinaxis (KXS.TO).RBC believes Celestica will report Q1 earnings above consensus and increase FY26 guidance, given hyperscaler capex continues to increase, along with strong network switch and AI server demand, against Celestica's historically conservative outlook, added RBC."Given the strong 36% YTD rally in Celestica's shares, Q1 results may not be a catalyst for the stock," said RBC. "Even so, we believe Celestica's strong growth momentum, ongoing margin expansion, and mix shift to more structurally attractive segments of the market are likely to help sustain Celestica's valuation to remain above peers and toward the high end of its historical range."For Shopify, RBC expects "solid" Q1 results and Q2 guidance slightly above consensus estimates.U.S. e-commerce spending strengthened through Q1, noted RBC which it believes implies revenue growth accelerates sequentially, with Q1 revenue and adj. EPS likely slightly above consensus."While the valuation of Shopify's shares has re-rated down with the YTD pullback in software stocks, Shopify's fundamentals remain solid, in our view, and we expect strong growth to drive shareholder returns over the long term," said RBC.RBC expects Constellation's shares to modestly rally following Q1 results."With the stock trading near multi-year valuation lows, we see investor sentiment improving, given Q1 slightly ahead of consensus, TTM free cashflow up 25%, and annualized Q1 capital deployed on acquisitions likely tracking to a new record," said RBC. "We see Constellation's valuation as compelling, compared to our forecast for a 17% adj. EBITDA CAGR over the next 3 years."RBC believes Kinaxis's shares may "slightly rally" following Q1 results. It expects Kinaxis to report "solid" Q1 results, slightly above consensus, with continued growth re-acceleration and likely healthy bookings."With Kinaxis seeing reaccelerating growth, but trading at discounted valuation levels, we see compelling risk-reward on the shares," added RBC. "Moreover, ramping share buybacks may provide a floor for the stock."Price: $565.60, Change: $+28.12, Percent Change: +5.23%

OpenText Appoints James McGourlay as President, Chief Client Officer

OpenText (OTEX.TO) on Monday said that James McGourlay will transition from interim chief executive officer to president, chief client officer, effective April 20, 2026."In this role, McGourlay will lead OpenText's global client experience, professional services, and renewals organization," said the company.The company also said that McGourlay will report to Ayman Antoun, Chief Executive Officer of OpenText as of April 20, 2026, and will continue to serve as a member of the OpenText Executive Leadership Team. The company further said that McGourlay has held senior leadership roles across sales, customer operations, and executive management at OpenText."James is a proven leader with more than 30 years at OpenText, and his career has consistently been anchored in our clients and what is essential to their success," said Tom Jenkins, Executive Chairman of the Board and Chief Strategy Officer, OpenText. "As Chief Client Officer, James will strengthen client experience and renewals, support cloud adoption, and advance OpenText's position as the trusted partner for data and security for enterprise AI."The company also announced that effective April 20, 2026, Paul Duggan will be stepping down from his position as president, chief customer officer and will continue to serve as executive vice president, special advisor. The company added that Duggan will also remain a member of the OpenText Executive Leadership Team until his departure from OpenText on July 1, 2026.

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)

RBC on OpenText's Preliminary Q3 Revenue

OpenText (OTEX.TO, OTEX) last week pre-announced preliminary third-quarter revenue of US$1.28 billion, effectively in line with RBC/consensus estimates of $1.27 billion.In a note, RBC Capital Markets analyst Paul Treiber, who has a sector-perform rating and US$30.00 price target on the stock, estimates the third-quarter preliminary revenue implies constant-currency organic growth of -0.9%, better than the -1.6% in RBC's model and up from -2.6% in the second quarter."[T]he results suggest OpenText's Q3 was largely stable despite geopolitical disruptions during the quarter. In light of the continued pessimism for software stocks, an in-line quarter with slightly negative organic growth is unlikely to be a material catalyst for the stock. However, with OpenText trading at a deeply discounted valuation of 5.7x EV/EBITDA and 4.8x P/E, the results shouldn't weigh on the shares, in our view."Price: $29.64, Change: $+0.81, Percent Change: +2.81%

Open Text Announces European Cloud Solutions Partnerships

Open Text (OTEX.TO) said Monday, it will offer some of its enterprise data and AI solutions on the AWS European Sovereign Cloud, a new independent cloud-based infrastructure for Europe.The AWS European Sovereign Cloud is separate from current AWS global regions and is backed by "strong technical controls, sovereign assurances, and legal protections" to meet the needs of European governments and enterprises, company said in a statement said.OpenText separately announced a strategic partnership with S3NS, which is an alliance between Thales, a French cybersecurity company, and Google Cloud, to offer to European organizations a cloud platform that meets strict French security and compliance criteria.The partnership delivers a hybrid cloud architecture for Europe out of France, helping organizations to keep their most sensitive data workloads within a locally governed environment, while leveraging hyperscaler cloud services for non-sensitive workloads, innovation, and scale, a statement said."Across Europe, organizations are seeking innovation that preserves sovereignty and control. OpenText is delivering on that need by pairing hyperscaler innovation with an independently governed operating model, giving customers the confidence to modernize while keeping their data, access, and operations securely under regional control," said chief information officer Shannon Bell.OpenText shares closed up $0.43, to $28.83, on Friday on the Toronto Stock Exchange.