CGI Earnings: Strong Bookings Growth and More Emphasis on Financial Discipline as CGI Kicks Off 2024

We maintain our CAD 137 fair value estimate for narrow-moat CGI after the firm kicked off fiscal 2024 with a strong set of results, combining top-line growth with an increased emphasis on operational discipline, as evidenced by the firm’s cost optimization program. With forward-looking metrics such as bookings showing strength, we think a mixture of an improving macro as well as client demand for AI solutions will provide positive tailwinds for CGI’s near-term sales. At the same time, we expect management’s cost optimization program to provide a margin uplift in the medium to long term. With shares trading slightly up after the earnings report, we view them as marginally overvalued.