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Expect another strong quarter from Descartes Systems, says Cantor Fitzgerald

Descartes Systems
Descartes Systems
Cantor Fitzgerald analyst Justin Kew notes that Descartes is growing at at time when industry fundamentals are flat to slightly down. He points out that the Cass Freight Index, a measure of North American freight volumes and expenditures, is down 1.5% year-over-year.

Expect another strong performance from Descartes Systems Group (Descartes Systems Group Stock Quote, Chart, News: TSX:DSG) tomorrow, says Cantor Fitzgerald analyst Justin Kew.

On Thursday, Descartes will report its Q2, 2014 numbers. The Waterloo-based logistics player is following on a Q1 in which it posted earnings of (U.S.) $2.8-million on revenue of of $34-million, which was a 14% bump from the $29.9-million the company posted in 2013’s first quarter.

Kew says Descartes continued growth is somewhat predictable because the company’s network effect is creating a stronger and stronger pipeline. He say this was illustrated last quarter when the company booked a large license revenue contract for a same-day delivery solution for a large U.S retailer, underscoring its position as a “highly strategic” vendor to world-class companies.

In a research update to clients this morning, Kew maintained his BUY rating and $13.00 one-year target price on Descartes Systems Group.

Kew’s expectations for Descartes’ Q2 are in line with the street’s. He think the company will generate EBITDA of $10.6-million on revenue of $37.4-milion.

The Cantor Fitzgerald Canada analyst notes that Descartes is growing at at time when industry fundamentals are flat to slightly down. He points out that the Cass Freight Index, a measure of North American freight volumes and expenditures, is down 1.5% year-over-year. Kew says Descartes’s strong recurring revenue base insulates it against macro fluctuations.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

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