Analyst quoted in 'Where to invest in 99' feature in December 31's Financial Post
CGI Group Inc of Montreal (GIBa/ME) is a favourite of Josef Vejvoda, technology analyst at Levesque Beaubien Geoffrion Inc in Toronto. Its share price soared 144% in 1998 to close yesterday at $29.75, up $1.30. Despite a high multiple, he has a 12-month price target of $38.
"Look at how much CGI has in backlog. It's like $4.5-billion. From this year to next year, it's guaranteed to double revenue and earnings. People say, That's a little aggressive, Joe' but no, it's not. If you look at the backlog, work is guaranteed for five- or I0-year contracts.
"Worst-case scenario here is if someone cancels one of those contracts, they would have to pay CGI a one-year penalty. So if everyone cancels, CGI still doubles their revenue and earnings."
[Note: as we know, the estimated backlog is actually $6.5 billion.] |
