The Waterloo, Ont.-based business software maker’s stock has recovered well following a huge sell-off last spring, when the company’s weak results and forecast wiped off as much as 20% of their value in one day.
This past quarter marked the first that included numbers from rival Hummingbird Ltd., which Open Text paid roughly US$489-million for in a deal that closed in October.
Clarus Securities analyst Blair Abernethy said in a research note that the integration of Hummingbird appears to be on track, while the speed and extent of Open Text’s cost-cutting drove earnings per share well above his expectations.
He raised his price target on Open Text shares to US$24 from US$23 and upgraded his recommendation to “buy” from “accumulate.”
Meanwhile, Merrill Lynch analyst Edward Maguire reiterated his “sell” rating on Open Text shares, citing a lack of detailed information on the company’s specific operational segments, including Hummingbird’s connectivity business.
Open Text’s cost-cutting measures appear to be working and the prospect of private equity interest could serve to limit the downside for Open Text shares, he said in a research note.
However, Mr. Maguire recommends selling the stock until its combination with Hummingbird shows further signs of succeeding.
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