-- CGI Inc. (GIB-A.TO, GIB) was downgraded to Sector Perform from Outperform at RBC Capital Markets.
Analyst Paul Treiber lowered his price target on shares of the Montreal-based information technology consulting and software development company to $100 from $150.
The stock declined $10.86, or 10.8%, to $89.78 on Wednesday following CGI's quarterly results.
"The 11% decline in CGI's shares following Q2 results shows that the market is becoming increasingly pessimistic in light of AI uncertainty," Treiber said in a note to clients.
"Even though CGI's shares are trading at multi-year valuation lows, we believe the probability of an upward valuation re-rating has declined," the analyst said.
"We believe pessimism regarding the potential AI-related headwind to IT services pricing and growth is likely to be sustained for a longer duration than we previously expected, particularly as CGI's organic growth has trended below our expectations," Treiber said.
"Over the last 10 quarters, CGI's organic growth has averaged below 99 bps below our estimates, and the company has experienced 7 quarters of negative organic growth," the analyst said.
"While a large portion of the shortfall stems from cyclical factors, we believe intensifying AI-related pricing deflation and substitution are potential headwinds to future organic growth."