OTEX Should I Buy
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OpenText Corp (OTEX) is not a strong buy at the moment for a beginner investor with a long-term strategy. The stock is underperforming, with declining financial metrics, bearish technical indicators, and a lack of positive catalysts to drive immediate growth. While the company is making strategic adjustments, such as divestitures and buybacks, these are unlikely to yield significant short-term benefits. For now, it is better to hold off on investing in OTEX until clearer signs of growth or stability emerge.
The technical indicators for OTEX are bearish. The MACD is negatively expanding, RSI is neutral at 34.466, and moving averages are in a bearish alignment (SMA_200 > SMA_20 > SMA_5). The stock is trading below its pivot level of 24.548, with key support at 22.89 and resistance at 26.206. These signals suggest a downward trend in the short term.
The company has a solid gross margin of 65.45%, which increased by 0.97% YoY.
OpenText is ramping up stock buybacks, which could provide some support to the stock price.
Cloud revenue grew by 3.4% YoY, indicating some strength in this segment.
Hedge funds are selling the stock, with a 207.84% increase in selling activity last quarter.
Net income and EPS have significantly declined YoY, down 26.87% and 24.14%, respectively.
Analysts have lowered price targets across the board, with no upgrades or positive revisions.
The stock is facing downward pressure due to earnings and revenue misses in Q2.
In Q2 2026, OpenText reported a revenue decline of 0.58% YoY to $1.33 billion. Net income dropped 26.87% YoY to $168.09 million, and EPS fell 24.14% YoY to $0.66. While the gross margin improved slightly to 65.45%, the overall financial performance reflects a weakening growth trajectory.
Analysts have a neutral to bearish outlook on OTEX. Multiple firms, including Citi, UBS, RBC Capital, Barclays, and TD Securities, have lowered their price targets, citing weaker financial performance and concerns about growth re-acceleration. The current price targets range from $26 to $30, with no positive revisions.
