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An estimated 26% of Open Text Corp. (NASDAQ:OTEX) shares may be sold short – thanks to accounting issues – but analysts are nonetheless reiterating their bullish stance on the software and solutions provider ahead of its fourth quarter results due out after markets close on Thursday.

While the short position on Open Text has risen in the past six months, the U.S. Securities and Exchange Commission recently completed its review of the company with no comments, Raymond James analyst Steven Li told clients in a note. He thinks a solid quarter will provide some relief from these issues.

Another factor contributing to his optimism is the lack of a pre-announcement of results, which he thinks suggests the company is confident in its estimates.

Mr. Li anticipates revenue of C$165-million and adjusted earnings per share [EPS] of C36¢, compared to the consensus estimate of C$165-million and C39¢ respectively. And now that Open Text has completed the integration of Hummingbird, investors are focusing on fiscal 2008.

Based on his EPS forecast for next year, Mr. Li says Open Text has one of the cheapest valuations in the software universe. He rates the shares at “outperform” with a C$31 price target (US$28).

Blackmont Capital analyst Lawrence Rhee, meanwhile, expects revenue of C$165.6-million and EPS of C37¢ for the quarter, which is typically Open Text’s strongest.

He thinks strength in the ECM market and benefits from the Hummingbird acquisition make Open Text worthy of a “buy” recommendation and price target of US$25.50.

OTEX 1-yr chart:

Source: Open Text: Analysts Bullish Ahead of Q4 Results Thursday, Despite Increase in Shorts