Analyst Ratings January 27, 2026

Scotiabank Starts Coverage of CGI With Sector Perform, C$140 Target

Bank flags discretionary consulting exposure as driver of neutral rating; CGI forges global AI alliance with OpenAI amid mixed operational signals

By Maya Rios GIB
Scotiabank Starts Coverage of CGI With Sector Perform, C$140 Target
GIB

Scotiabank has initiated coverage of CGI Group Inc with a Sector Perform rating and a C$140.00 price objective. The bank cites the company’s exposure to discretionary IT spending in its Consulting business as the primary reason for a neutral stance, while noting valuation metrics that sit modestly above peer averages. CGI has also announced a global alliance with OpenAI and faces recent operational indicators including declining book-to-bill ratios and weaker organic growth.

Key Points

  • Scotiabank initiated coverage of CGI with a Sector Perform rating and a C$140.00 target - impacts investment decisions in IT services and tech sectors.
  • Scotiabank applies ~9.3x CY2027E EV/EBITDA to CGI versus a peer average of 8.8x; CGI currently trades at 10.55x EV/EBITDA and a 16.67 P/E - relevant for equity valuation and relative performance analysis.
  • CGI announced a global alliance with OpenAI to expand enterprise AI solutions, while RBC Capital reiterated an Outperform rating with a C$165.00 target - developments of interest to AI, consulting, and enterprise software markets.

Scotiabank has launched coverage of CGI Group Inc (TSX:GIB/A) (NYSE:GIB), assigning a Sector Perform rating and setting a target price of C$140.00.

According to InvestingPro data cited by the bank, CGI shares were trading at $89.19, a level that implies potential upside relative to Scotiabank’s Fair Value assessment. The information technology services provider carries a market capitalization of $19.12 billion and is scheduled to report earnings tomorrow.

In its initial coverage, Scotiabank values CGI at a slight premium to the broader IT services peer group, applying roughly 9.3x CY2027E EV/EBITDA versus the peer average of 8.8x. By comparison, CGI currently trades at an EV/EBITDA multiple of 10.55x and a price-to-earnings ratio of 16.67.

The bank’s neutral recommendation is driven mainly by the company’s exposure to discretionary IT expenditures concentrated in its Consulting business, which is part of the Systems Integration and Consulting - SI&C - segment. Scotiabank highlighted that the SI&C division has recorded book-to-bill ratios below 100% for several consecutive quarters, a condition that has weighed on revenue growth.

Those dynamics have produced flat to slightly negative organic growth for CGI, and Scotiabank expects that trend to persist through at least the first half of fiscal 2026.

Alongside the coverage note, CGI announced a global alliance with OpenAI intended to scale enterprise AI capabilities across industries. The partnership is described as building on a prior pilot program the company ran with OpenAI in the United Kingdom, and it aims to deploy AI functionality with an emphasis on secure and responsible implementation.

Separately, RBC Capital has reiterated an Outperform rating on CGI, retaining a price target of C$165.00. RBC’s commentary noted a 5% decline in job postings quarter-over-quarter, marking the sixth straight quarter of sequential declines. Despite that hiring metric, RBC’s stance signals continued confidence in the company’s market positioning.

Taken together, the new coverage from Scotiabank, CGI’s strategic AI collaboration, and RBC’s reaffirmation illustrate contrasting inputs for investors: valuation and partnership momentum on one hand, and near-term top-line pressure tied to consulting demand on the other.

Risks

  • Continued weakness in discretionary IT spending could further pressure the SI&C segment, affecting top-line performance and organic growth - relevant to IT services and consulting sectors.
  • Persistent book-to-bill ratios below 100% may sustain flat to negative organic growth through at least the first half of fiscal 2026, introducing revenue risk and potential margin pressure.
  • Sequential declines in job postings, including a noted 5% quarter-over-quarter decrease, could constrain capacity or signal softer demand trends that affect delivery and revenue recognition.

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