RBC Royalbank lowers the target on Open Text(OTEX:TSX) to $67 from $77.50

STA Research
by: STA Research

RBC Royalbank lowers the target on Open Text to $67 from $77.50, and maintained the Outperform rating.

Raymond James Capital raised the target to $77 from $74.50, and maintained the Outperform rating on the company.

TD Research cut the target to $64 from $72.50, and kept the Buy rating on the stock price intact.

Open Text Corporation Stock Analysis:

Based on the Open Text Corporation stock forecasts from 4 analysts, the average analyst target price for Open Text Corporation is CAD 76.25 over the next 12 months. Open Text Corporation’s average analyst rating is Strong Buy. Stock Target Advisor’s own stock analysis of Open Text Corporation is Slightly Bullish , which is based on 7 positive signals and 4 negative signals. At the last closing, Open Text Corporation’s stock price was CAD 52.16Open Text Corporation’s stock price has changed by +3.59% over the past week, -3.39% over the past month and -10.47% over the last year.

What we like:

High market capitalization

This is one of the largest entities in its sector and is among the top quartile. Such companies tend to be more stable.

Superior risk adjusted returns

This stock has performed well, on a risk adjusted basis, compared to its sector peers(for a hold period of at least 12 months) and is in the top quartile.

Low volatility

The stock’s annual returns have been stable and consistent compared to its sector peers(for a hold period of at least 12 months) and is in the top quartile. Although stability is good, also keep in mind it can limit returns.

Superior return on equity

The company management has delivered better return on equity in the most recent 4 quarters than its peers, placing it in the top quartile.

Superior return on assets

The company management has delivered better return on assets in the most recent 4 quarters than its peers, placing it in the top quartile.

Positive cash flow

The company had positive total cash flow in the most recent four quarters.

Positive free cash flow

The company had positive total free cash flow in the most recent four quarters.

What we don’t like:

Below median dividend returns

The company’s average income yield over the past 5 years has been low compared to its peers. However, it is not a problem if you are not looking for income.

Overpriced on cashflow basis

The stock is trading high compared to its peers on a price to cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy.

Highly leveraged

The company is in the bottom half compared to its sector peers on debt to equity and is highly leveraged. However, do check the news and look at its sector and management statements. Sometimes this is high because the company is trying to grow aggressively.

Overpriced on free cash flow basis

The stock is trading high compared to its peers on a price to free cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy.

 

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