BMO Capital analyst Keith Bachman has maintained their neutral stance on TIXT stock, giving a Hold rating today.
Keith Bachman has given his Hold rating due to a combination of factors, including TELUS International (CDA)’s mixed quarterly performance and the company’s optimistic forward-looking guidance amid a less encouraging macroeconomic environment. Despite outperforming on profitability, TIXT fell short on revenue expectations, primarily due to a decline in client growth outside of its top three clients, which includes its parent company TELUS, Google, and Facebook. The revenue from these key clients, although still substantial, has shown signs of slowing down or declining, which raises concerns about the company’s broader client base and growth trajectory.
Moreover, Bachman has adjusted the target price from $9.50 to $7.50, reflecting a more cautious valuation approach in light of the company’s current challenges. This new target price is based on a lower earnings before interest, taxes, depreciation, and amortization (EBITDA) multiple, considering the risks related to the ambitious revenue growth implied for the latter half of the fiscal year and the weak underlying client metrics. While the company is expecting a demand recovery in the second half of the year, this stands in contrast to more pessimistic industry-wide expectations regarding IT service demand, suggesting potential over-optimism on TELUS International’s part. This context justifies the Hold rating, as TIXT may face difficulties in meeting its own revenue growth projections in a potentially challenging market.
In another report released today, Barclays also assigned a Hold rating to the stock with a $9.00 price target.
TIXT’s price has also changed slightly for the past six months – from $6.600 to $6.360, which is a -3.64% drop .
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TELUS International (CDA) (TIXT) Company Description:
TELUS International (Cda) Inc is a digital customer experience innovator that designs, builds, and delivers next-generation solutions. Its clients include companies across several verticals, including Tech and Games, Communications and Media, eCommerce and FinTech, Healthcare and Travel and Hospitality. The solutions offered by the company include Digital Experience, Customer Experience, Advisory services, and Back Office & Automation among other services.
