Q: OpenText has had a rough ride over the last few months. Any insight as to what is driving this? Any thoughts as to if this might be a buying opportunity?
5i Research Answer:
Its recent earnings have sent the stock lower, as well as a lot of downgrades following its latest results. It is seeing strong cloud bookings momentum, but increased cloud investments are weighing on its near-term margins and free cash flow. Its low valuation already reflects a lot of expected margin compression, but we are not huge fans of its recent negative momentum. We would prefer to wait until the price finds some support before accumulating here.