Q: After your weekend review, please advise as to whether or not you would recommend adding to one's position in OTEX in light of the latest earnings report. I am keen to do so, but only if 5i continues to believe in the longterm prospects of OTEX.
5i Research Answer:
The quarter was certainly not great, but that is reflected in the valuation. The stock has seen a lot of downgrades following the results, but EPS growth is still expected this year. But next year growth is expected to be quite low. The conference call was not overly interesting. The company is committed to share buybacks rather than reducing debt, but is seeing good cloud growth. The very low valuation makes it a HOLD, but we would not add and do not like the negative momentum here.