In a report released today, Aravinda Galappatthige from Canaccord Genuity maintained a Buy rating on TELUS International (CDA), with a price target of $5.25.
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Aravinda Galappatthige has given his Buy rating due to a combination of factors influencing TELUS International’s performance and market position. The company has demonstrated a solid revenue growth of 7.2% year-over-year, driven by advancements in AI data solutions and support from its parent company, TELUS. Despite facing challenges such as pricing pressure and labor inflation impacting EBITDA margins, the company is showing signs of stabilization with potential growth opportunities in AI data solutions.
Moreover, the IT services sector is exhibiting signs of a slow recovery, with peers like EPAM and Cognizant guiding towards positive organic growth, aligning with TELUS International’s top-line expectations. Additionally, the stock’s current trading premium over TELUS’s offer price suggests potential for an upward revision, making it an attractive speculative buy. The potential for cross-selling and product intensity among key clients further supports the positive outlook, despite the reduced target price due to margin pressures.
Based on the recent corporate insider activity of 63 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of TIXT in relation to earlier this year.