TORONTO (Reuters) - Shares of Open Text OTC.TO surged 14 percent on Thursday morning after the business software company posted a sharp jump in profit and several analysts upgraded their view.
The company’s licensing revenue in the quarter - an indicator of future demand - came in higher than expected, while a feared disruption from weak European demand was muted.
“We expect this quarter’s results to mark a change in sentiment toward the company,” Stifel Nicolaus analyst Blair Abernethy wrote in a note upgrading the company to a “buy”.
But Susquehanna Financial analyst J. Derrick Wood was more circumspect, raising his price target to $45 from $40 but retaining a negative rating. He warned that a focus on organic growth after a string of acquisitions risks either stagnation or declining margins.
Shares in the Waterloo, Ontario-based company rose as much as C$8.22, or 15.6 percent, to C$60.88 on the Toronto Stock Exchange on Thursday, before easing slightly to C$60.25. The stock had fallen some 15 percent since early November.
Reporting by Alastair Sharp; editing by Rob Wilson