Descartes Systems (TSX:DSG) last week held its annual Descartes Evolution Conference in Fort Lauderdale. The get-together, says Descartes, let users meet the management team to discuss product developments plans and look for ways to improve their operations.
Cantor Fitzgerald analyst Tom Liston attended the conference. Liston, who covered Descartes with his previous firm, Versant Partners, has been consistently bullish on the Waterloo-based logistics player. But he says now, after returning from Florida, he is more bullish than ever about Descartes prospects for growth. The Cantor Fitzgerald analyst says the company is a safe haven in a volatile market and should be an overweight holding for investors. In a research update to clients yesterday, Liston maintained his BUY rating and $10.50 target price on Descartes.
After nearly becoming a dot-bomb casualty, former Gartner analyst Art Mesher rescued Descartes, which has since become a leader in global logistics technology; solutions that help its customers make and receive shipments. The company finds itself at the cutting edge of a trend; across the globe governments are looking to untangle and standardize their logistics operations. An increasing amount of evidence suggests a clear link between logistics performance and economics growth. The World Bank’s Logistics Performance Index showed that low and middle income countries such as Brazil and Columbia have given their economies a shot in the arm through improved logistics, while other emerging economies, such as Turkey, have been hurt by a lack of logistics infrastructure. Descartes’revenue has grown from $66-million in fiscal 2009 to nearly $114-million in 2012.
Liston says that his conversations with customers revealed something very interesting; most consider Descartes not to be a vendor, but a partner in their business. He says that with the economy continuing to struggle, the pressure to reduce costs is intense. Many Descartes customers, he says, told him Descartes delivers a 5x to 15x return on investment. Descartes customers include household names such as Hallmark, The Home Depot, DHL, and CVS Caremark.
Shares of Descartes Systems on the TSX closed Friday up 1.4% to $8.21.