Open Text (NasdaqGS:OTEX): Is The Market Underestimating Its Valuation After Recent Momentum Cooldown?

Open Text (OTEX) has drifted slightly over the past month, but the longer term picture is more interesting. The stock is up about 24% over the past year despite a weaker past 3 months.

See our latest analysis for Open Text.

That mix of a solid year to date share price return, while the last quarter has slipped back, suggests momentum has cooled a bit as investors reassess growth and integration risks, even though the one year total shareholder return remains comfortably positive.

If Open Text has you thinking about where else software demand could surprise, this could be a good moment to explore high growth tech and AI stocks for your next idea.

With profits growing faster than revenue and the shares still trading at a sizeable discount to analyst targets and intrinsic value estimates, is Open Text quietly undervalued, or is the market already pricing in its next leg of growth?

Most Popular Narrative Narrative: 17.6% Undervalued

With Open Text last closing at $33.34 against a narrative fair value near the low $40s, the gap reflects confidence in its evolving earnings power.

Ongoing business optimization and restructuring initiatives are expected to deliver substantial annualized cost savings (with 35% additional realized in FY26). This is expected to enable further EBITDA margin expansion and continued robust free cash flow growth.

Read the complete narrative.

Curious how modest revenue growth can still support a richer valuation? The narrative leans on expanding margins, rising earnings per share, and a lower future earnings multiple. Want to see how those moving parts fit together to justify that higher fair value?

Result: Fair Value of $40.45 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent legacy maintenance declines or weaker than expected cybersecurity cloud growth could quickly undermine the upbeat margin and earnings narrative around Open Text.

Find out about the key risks to this Open Text narrative.

Build Your Own Open Text Narrative

If you are not fully convinced by this view, or would rather dig into the numbers yourself, you can build a custom narrative in minutes: Do it your way.

A great starting point for your Open Text research is our analysis highlighting 6 key rewards and 2 important warning signs that could impact your investment decision.

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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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