CGI (GIB) Benefits From Expanding Clientele, Partner Base
CGI GIB is benefiting from an expanding clientele and strong partner base. Shares have returned 20.6%, outperforming the Zacks Computer-Services industry’s 10.4%, on a year-to-date basis. However, it has underperformed the Zacks Computer & Technology sector’s return of 36.9%.
CGI has been benefiting from strong demand for its business solutions. In the fiscal third quarter, the overall IP portfolio grew 12.4% year over year or 7.7% at constant currency. The number of consultants and professionals increased year over year by 3K, totaling 91,500 worldwide.
Expanding clientele has been a key catalyst. CGI’s solutions were selected by the likes of the U.S. Environmental Protection Agency, and Bankgirot (Sweden’s payments clearinghouse), a government ministry in Germany.
CGI also expanded its footprint in the financial services sector as it signed 28 agreements with clients in the United States, Canada, UK and Australia. The company’s All Payments solution has recently been selected by Scotiabank, a leading Canadian multinational bank.
CGI’s cloud-proven enterprise payments platform will support Scotiabank’s innovative advances in payment solutions for its global client base. CGI All Payments is used by financial services clients across the world and supports multiple currencies, languages and payment channels.
CGI Group, Inc. Price and Consensus
CGI Group, Inc. price-consensus-chart | CGI Group, Inc. Quote
CGI recently inked a partnership with Alimentation Couche-Tard worth C$380 million to deliver managed IT services. As part of the ten-year partnership, CGI will deliver a comprehensive range of IT services and infrastructure support for the mission-critical business functions of Couche-Tard.
Alimentation Couche-Tard, which is a multinational operator of convenience stores in Canada, will leverage the partnership to improve services to its customers.
CGI’s Prospects Bright in 2023
CGI is expected to benefit from the ongoing digitalization amid challenging macroeconomic conditions. Strong demand for the company’s managed services and IP offerings is expected to drive top-line growth in the near term.
The company’s managed services pipeline for industries like manufacturing, retail, and energy and utilities is up more than 33% for the next year, while the IP pipeline is up 30%. Moreover, in government health care and insurance, CGI’s pipeline remains well balanced across consulting system integration and managed services and is up 20% year over year.
CGI is also investing in the development of AI-based solutions and services and plans to invest $1 billion over the next three years.
The Zacks Consensus Estimate for fiscal 2023 and fiscal 2024 revenues are pegged at $10.93 billion and $11.4 billion, indicating growth of 8.42% and 4.36%, respectively.
Zacks Rank & Stocks to Consider
CGI currently has a Zacks Rank #3 (Hold).
Dell Technologies DELL, NVIDIA NVDA and Splunk SPLK are some better-ranked stocks in the broader sector, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Dell Technologies, NVIDIA and Splunk is currently pegged at 12%, 13.5% and 24.71%, respectively.
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