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CGI Inc. (GIB.A) shares rose more than 1% after the IT and business consulting services firms posted higher profits in the second quarter despite lower revenues.
CGI’s revenue came in at C$3.08 billion for the quarter ended March 31, slightly down from C$3.13 billion in the prior-year quarter. However, bookings were up 40% year-over-year, reaching C$3.89 billion in the second quarter.
Meanwhile, 2Q 2021 net earnings were C$341.2 million, up 8.4% from the same period last year. Diluted EPS increased 13.6% to C$1.34. Excluding specific items, net earnings came in at C$341.9 million in 2Q 2021, while diluted EPS increased 7.1% to C$1.35.
CGI’s President and CEO George D. Schindler said, "CGI delivered another strong quarter underscored by solid margins, robust cash generation, and positive revenue trends. The ability of our talented consultants to deliver the right insights and solutions to our clients is clearly visible in the 40% year-over-year increase in total bookings this quarter. With the continued acceleration in demand for our end-to-end services across every industry and geography that we serve, we are well-positioned to return to year-over-year revenue growth in the second half of fiscal year 2021." (See CGI Group stock analysis on TipRanks)
Last week, Scotiabank analyst Paul Steep reiterated a Buy rating on the stock, while raising its price target to C$112.00 from C$106.00 (6% upside potential).
Steep believes that the Montreal-based company will continue to perform well in a volatile environment where clients prioritize their long-term objectives over their short-term pandemic-related challenges. He notes that CGI generates significant cash flow, which allows it to consider acquisitions and repurchase shares.
Overall, the consensus on the Street is that GIB.B is a Strong Buy based on 5 Buys and 1 Hold. The average analyst price target of C$113.09 implies an upside potential of about 6% to current levels. Shares have jumped by approximately 25% over the past six months.