OTEX Should I Buy
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Open Text Corp (OTEX) is not a strong buy at the moment for a beginner investor with a long-term strategy and $50,000-$100,000 available for investment. The company's financial performance shows declining revenue, net income, and EPS, while hedge funds are selling the stock. Technical indicators suggest a bearish trend, and analysts have recently lowered price targets with neutral ratings. There are no significant positive catalysts or trading signals to support a buy decision at this time.
The technical indicators for OTEX suggest a bearish trend. The MACD histogram is negative and contracting, RSI is neutral at 35.862, and moving averages are bearish (SMA_200 > SMA_20 > SMA_5). Key support and resistance levels are S1: 21.99, S2: 21.575, R1: 23.335, and R2: 23.75, with the stock trading below the pivot level of 22.662.
The company reported solid cloud bookings and intends to ramp up stock buybacks, which could provide some support to the stock price.
Hedge funds are selling the stock, with a 207.84% increase in selling activity over the last quarter. Analysts have lowered price targets significantly, citing weaker-than-expected guidance and lower peer valuations. The company's financials show declining revenue (-0.58% YoY), net income (-26.87% YoY), and EPS (-24.14% YoY). Additionally, news highlights governance gaps in AI maturity, which could impact long-term business value.
In Q2 2026, Open Text Corp's revenue dropped to $1.33 billion (-0.58% YoY), net income fell to $168.09 million (-26.87% YoY), and EPS decreased to $0.66 (-24.14% YoY). However, gross margin improved slightly to 65.45% (+0.97% YoY).
Recent analyst ratings are neutral, with multiple firms lowering their price targets. Citi, UBS, RBC Capital, Barclays, and TD Securities have all reduced their targets to a range of $26-$30, citing concerns about growth acceleration, weaker guidance, and lower peer valuations.
