The Montreal-based IT firm behind the troubled federal and state Obamacare portals may be getting bad reviews on Beacon Hill and on Capitol Hill, but it's been a darling of Wall Street, which has sent its stock price soaring 45 percent this year.
State Health Connector officials this week said they would hold CGI Group accountable for its "persistent under-performance," even as federal officials this week called for the inspector general to review the company's work.
"The overall system performance is far from where it needs to be," said Roni Mansur, deputy executive director and chief operating officer of the Health Connector.
But analysts continue to rate CGI's stock, which closed yesterday at 33.75, as a buy, and some investors remain bullish on Canada's largest tech company.
"We don't plan on selling any stocks," said Marc L'Ecuyer, portfolio manager for Quebec financial firm COTE 100, citing strong margins and capable management.
Brandon Snow, a portfolio manager for Cambridge Asset Management in Toronto, said negative publicity won't hurt CGI's long-term potential. "Our opinion of the company has not been affected because of the recent events," he said.
Still, officials from Ontario to Hawaii have pointed the finger at CGI for poor performance.
CGI was awarded a $46 million contract in Ontario to build a diabetes registry, but repeatedly missed deadlines, according to an auditor's report.
"It was payable upon delivery, and they failed to deliver, and we canceled," Ontario eHealth spokesman Rob Mitchell told the Herald.
Hawaii is paying $32 million to rebuild a tax collection system built by CGI between 1999 and 2011, and Vermont has experienced poor performance on its CGI-built health exchange.
CGI began competing for government contracts about a decade ago when it bought Virginia-based American Management Systems, keeping many of its employees even though the company had a troubled track record, according to published reports.
Snow said CGI has a history of acquiring poorly performing companies and turning them around.
"It seems like their M.O.," Snow said.
Larry Allen, a Virginia-based government contract expert, said CGI has since done a lot of work for the feds, including more than $1 billion in contracts in fiscal year 2012 for "a host of government agencies."
Political pressure over CGI's high-profile health exchanges may have played a role in their poor performance, Allen said. "I've seen several projects go off the rails when there has been a lot of pressure."
John Zaremba contributed to this report.
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