Open Text (OTEX) | News Based Sentiment Analysis

• On September 2, 2025, Open Text announced plans to divest non-core businesses – including parts of cybersecurity, analytics, and application automation – a move expected to reduce revenue by 20%-25% but also lower leverage from 2.8 to 2.1. This strategic shift signals a clear focus on higher-growth areas like data and AI, even as it means a short-term revenue dip.
• Despite a 3.8% year-over-year revenue decrease, Open Text reported quarterly EPS of $0.97 on September 9, 2025, exceeding expectations of $0.86 by $0.11. This beat demonstrates some resilience in the face of broader revenue headwinds and highlights the company’s ability to manage profitability.
• Following the earnings report on September 15, 2025, National Bank Financial significantly upgraded Open Text from "Sector Perform" to "Outperform," raising its price target from $34.00 to $45.00, representing a 26.12% potential upside from the $35.68 trading price. This upgrade, fueled by discussions with Tom Jenkins regarding AI strategy, contributed to an average price target of $40.61/share.
• Institutional investor confidence in Open Text increased during the month, with Jarislowsky, Fraser increasing holdings by 1.93% to 21,033K shares and Brandes Investment Partners increasing shares by 29.95% to 8,368K shares as of September 15, 2025. These moves suggest growing belief in the company’s long-term prospects despite recent performance.
• Deepscope's analysis, released on September 14, 2025, suggests Open Text’s intrinsic value is potentially 84% above its current share price, estimating a fair value of US$65.65 compared to a current price of US$35.68. This valuation indicates the stock may be 46% undervalued, though the report notes annual earnings are forecast to grow faster than revenue.
• Open Text is actively expanding its AI initiatives, partnering with HPE on September 2, 2025, to integrate its Aviator AI solutions with HPE's Private Cloud AI platform, and showcasing AI-driven innovation at STARWEST 2025 on September 24, 2025. These collaborations aim to capitalize on the growing demand for AI-powered solutions.
• OpenText is also focused on expanding its reach through events, participating in ISM 2025 in Reno, NV on September 14, 2025, hosting SMAX'25 Solution Day in Istanbul on September 18, 2025, and presenting at Big Data London 2025 on September 24, 2025.

The Investment Story: September was a month of strategic repositioning for Open Text, marked by a better-than-expected earnings report, a significant analyst upgrade, and a clear commitment to AI and cloud-based solutions through key partnerships and divestitures.

What It Means for Investors: Investors should view the mixed earnings results as a transitionary phase, with the focus shifting towards higher-growth areas. The analyst upgrade and institutional investment increases provide positive signals, but the revenue reduction from divestitures and modest overall growth projections require careful monitoring.

Looking Ahead: Investors should closely watch the execution of the FY26 outlook, particularly cloud revenue growth, the impact of the HPE and TELUS partnerships, and the successful integration of the Aviator AI platform. The $300 million buyback offers some downside protection.

The Bottom Line: Open Text is undergoing a strategic transformation, and while the dividend and buyback are shareholder-friendly, the company’s success hinges on its ability to deliver on its AI-driven growth strategy and navigate the challenges of its restructuring.