CGI (TSX:GIB.A) Could Be 16% Undervalued After D Wave Tie Up And Trade360 Win

CGI (TSX:GIB.A) has drawn fresh attention after two recent developments. The firm announced a partnership with D-Wave Quantum focused on practical quantum computing uses, and IDC MarketScape recognised its CGI Trade360 platform as a Leader.

Recent headlines around CGI have arrived alongside a mixed share price path, with the stock up 4.25% on a 1-day share price return and 7.84% over 90 days, yet the year-to-date share price return is down 19.46% and the 1-year total shareholder return has declined 19.38%. This suggests short-term momentum is improving while longer term investors are still under water despite this quantum and trade finance news flow.

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CGI now trades around CA$100.86 while both analyst targets and intrinsic estimates sit noticeably higher. The live question is how that gap maps to fair value after this latest quantum and trade finance news.

Most Popular Narrative: 16% Undervalued

On the most followed narrative, CGI screens as undervalued, with a fair value near CA$120 against the latest close of CA$100.86. This puts the recent quantum headlines on top of an already discounted cash flow story.

The company's robust $30.6 billion backlog, increasing book-to-bill ratios in higher growth segments (especially IP and managed services), and active pipeline of large digital modernization/legacy transformation projects position CGI for long-term revenue visibility and sustained free cash flow generation.

See why 30 investors see CGI as 16% undervalued.

Result: Fair Value of CA$119.85 (UNDERVALUED)

Still, CGI’s reliance on large government and enterprise contracts, combined with integration risk from deals like BJSS and Daugherty, could pressure margins and weaken this upbeat thesis.

Find out about the key risks to this CGI narrative.

Next Steps

Interested in whether the optimism in this CGI story really stacks up for you? Spend a few minutes with the underlying numbers and stress test your own thesis using the 4 key rewards.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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