John Gibson CFA, an analyst from BMO Capital, maintained the Hold rating on Computer Modelling (CMG – Research Report). The associated price target remains the same with C$12.00.
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John Gibson CFA has given his Hold rating due to a combination of factors. Computer Modelling’s recent quarterly performance showed significant growth in its Seismic Solutions segment, partly due to the Sharp acquisition. However, the Reservoir Simulation segment’s revenues saw a modest decline, influenced by broader macroeconomic uncertainties that caused budget restrictions for clients. This mixed performance underscores the company’s strategic emphasis on expanding its software sales, which offers a pathway to enhance recurring revenue and improve margins over the long term.
Despite the positive developments, valuation challenges remain a key concern, prompting the maintenance of a $12 target price and a Market Perform rating. While the strategic shift towards software sales and increased M&A potential are promising, the current valuation does not sufficiently justify a more optimistic rating. Therefore, the Hold rating reflects a balanced view of anticipated moderate growth and the company’s solid positioning in the market amidst evolving industry dynamics.
According to TipRanks, Gibson CFA is ranked #253 out of 9369 analysts.