-- 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)
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