Open Text Corp. (OTEX.TO, OTEX) was downgraded to Sector Perform from Outperform at RBC Capital Markets on Friday.
Analyst Paul Treiber lowered his price target on shares of the Canadian software company to US$33 from US$45 following its Q1 results.
"Our prior investment thesis assumed a valuation re-rating as OpenText stabilized Micro Focus, achieved positive organic growth and increased FCF," Treiber said in a note to clients. "However, the 11% decline in OpenText's shares (on Thursday) shows that the market is increasingly critical of gaps between actual and expected growth."
"With likely continued quarterly variability and a high bar for future organic growth, we now assume OpenText's valuation multiple is unlikely to materially change," the analyst said.
"Given the implied return to our target compared to our other covered stocks, we are downgrading OpenText's shares."
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