Descartes Systems Group’s PT Nudged Up to $25 by RBC After Q2 Adjusted EBITDA Beat (NASDAQ:DSGX)


Descartes Systems Group (NASDAQ:DSGX) received a small boost to its price target Friday from RBC Capital Markets, a day after the logistics-technology company released fiscal second-quarter adjusted earnings slightly above analysts’ consensus estimate despite lower-than-expected revenue. RBC’s price target on DSGX is now at $25 per share, up from its prior price target of $23 and above the stock’s Thursday closing price of $21.56.

The shares gained 1.5% in Thursday’s session on the results for the quarter ended in July, which featured an increase in adjusted earnings before interest, taxes, depreciation and amortization to $17.2 million from $14.6 million a year earlier, surpassing analysts’ mean estimate of $17.0 million. A 12% revenue increase to $50.5 million slightly missed the Street view for $50.7 million, but gross margin of 72.7%, up from 70.0% a year earlier, topped analysts’ expectations for 71.7%. RBC noted the variability in the company’s results reflects the “lumpiness” of its merger-and-acquisitions model, as Descartes hasn’t made an acquisition since April. “While the pace has been slow [year to date], management indicated that Descartes has a large M&A pipeline and anticipates additional acquisitions in the future,” the firm said. It added: “Management remains disciplined and is not chasing deals where valuations are elevated (larger targets are seeing higher valuations, smaller targets are still available at attractive valuations).” RBC kept its investment rating on DSGX at outperform.

About 8,754 shares traded hands. Descartes Systems Group Inc (USA) (NASDAQ:DSGX) has risen 28.21% since February 8, 2016 and is uptrending. It has outperformed by 11.72% the S&P500.

The Descartes Systems Group Inc. is a global well-known provider of federated network and global logistics technology solutions that help its clients make and receive shipments and manage related resources. The company has a market cap of $1.59 billion. The Company’s network solutions, which primarily consist of services and software, connect people to their trading partners and enable business document exchange (bookings, bills of lading, status messages); regulatory compliance and customs filing; route and resource planning, execution and monitoring; access and leverage global trade and restricted party data; inventory and asset visibility; rate and transportation management, and warehouse operations. It has a 71.31 P/E ratio.

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