Barclays has reduced its price target on OpenText (NASDAQ:OTEX) to $30.00 from $39.00 but left its rating unchanged at Equalweight, citing persistent growth concerns that temper the bank's outlook despite some encouraging operational metrics.
At the time Barclays published its revision, OpenText shares were trading at $22.79, close to a 52-week low of $22.44. The stock has fallen 10.73% over the previous week and is down 30.05% year-to-date. Separately, InvestingPro analysis referenced in the note indicates that OpenText appears notably undervalued relative to its Fair Value estimate.
Barclays' research acknowledged that OpenText produced a solid second quarter with improvements in both revenue and profitability. The firm highlighted the company's robust gross profit margin, reported at 76.23%, and pointed to the firm's dividend yield of 4.83% as a noteworthy income attribute, noting that the dividend has been increased for 13 consecutive years.
Despite those strengths, Barclays emphasized that growth remains modest and that the company is navigating broad-based changes across its business. The analyst team singled out several forward-looking revenue metrics that informed the lower target: Annual Recurring Revenue (ARR) is not expected to return to growth until fiscal year 2026, while Barclays projects total revenue and cloud revenue to expand by just 1.5% and 3.5% year-over-year, respectively, at the midpoint of its fiscal 2026 forecast.
Barclays also commented on leadership and strategic direction. The firm said OpenText's incoming chief executive appears aligned with the existing strategic plan - including continued divestitures and a refocus on core competencies - and that management has identified opportunities related to artificial intelligence. However, the bank made clear that it needs to see proof of execution from the new CEO and evidence that the company can demonstrate differentiated value to its customers before it will adopt a more positive stance on the shares.
On the strategic portfolio front, OpenText has entered into an agreement to sell its Vertica analytics business to Rocket Software for $150 million in cash, before taxes and fees. Barclays described Vertica as a non-core asset for OpenText; the unit contributed approximately $80 million in annual revenue for the fiscal year ending June 30, 2025. The divestiture is presented as consistent with OpenText's stated plan to concentrate on core cloud offerings and secure data management for enterprise AI initiatives.
Rocket Software's acquisition of Vertica is expected by market participants to bolster its high-performance analytics, data and AI capabilities. Within OpenText, the transaction and related portfolio pruning are part of a broader repositioning effort as the company seeks to sharpen its focus on higher-priority products and address changing market dynamics.
Separately, OpenText announced that Ayman Antoun will assume the role of Chief Executive Officer effective April 20, 2026. Antoun, who brings more than three decades of technology leadership experience, will succeed James McGourlay, the current Interim CEO. Antoun's previous role was President of IBM Americas, where he oversaw operations across the U.S., Canada and Latin America.
Taken together, the financial outlook set out by Barclays, the Vertica divestiture and the CEO appointment mark material developments as OpenText adjusts its strategic emphasis. For investors and market participants, the key signals are healthy profitability and a reliable dividend profile on one hand, and limited near-term top-line momentum and execution risk on the other.
What to watch next
- Execution by the new CEO after April 20, 2026, and management's ability to translate strategy into measurable growth.
- Trajectories for ARR, total revenue and cloud revenue through fiscal 2026 against Barclays' modest growth assumptions.
- Progress on further portfolio rationalization and how proceeds from divestitures are deployed.