Shares of enterprise software vendor Open Text (OTEX) are up $7.63, almost 15%, at $60.25 after the company last night reported fiscal Q2 revenue and profit per share ahead of analysts’ expectations. This was the first quarterly report since Mark Barrenechea was appointed chief executive of the company, effective yesterday.
To recap, the company saw revenue climb 20%, year over year, to $321.5 million, yielding EPS of $1.39. That was ahead of the consensus estimate of analysts of $312 million and $1.22.
The stock got one upgrade this morning, from Stifel Nicolaus’s Blair Abernethy, who raised the shares to Buy from Hold, writing, “OpenText performed well on most metrics in 2Q and is tracking for positive organic license growth this year.”
Abernethy writes, “We believe that management credibility will be enhanced through a clearer articulation of the new CEO’s strategy and execution thereof,” adding, “Catalysts for the stock include increased partner traction,
cross selling of BPM into the ECM base, and new product traction in mobile and autoclassification, which could see broad adoption across its base.”
Abernethy raised 2012′s projected revenue and profit to $1.23 billion and $4.74 per share from a prior $1.19 billion and $4.46.
RBC Capital‘s Mike Abramsky reiterated an Outperform rating and a $75 price target. He notes the company signed seven deals that were over a million dollars each, which is “notable, considering the unusually strong Q1 (normally seasonally weak) also with 7 1M deals, despite the challenging macro.”
Of Barrenechea, Abramsky writes,
He appeared already engaged and knowledgeable about OTEX, indicating his ST/LT priorities. He sees significant, underpenetrated, double-digit growth opportunities in core ECM (Content Management) and in �process enabled� ECM (eg BPM or Business Process Management). Key opportunities include compliance, big data, cyber security and cloud/mobility.
Abramsky maintains his estimate for $1.28 billion in revenue and $4.80 per share in profit.
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