Another record quarter for Waterloo-based logistics firm Descartes Systems Group (TSX:DSG) has PI tech analyst Pardeep Sangha taking a more bullish stance on the stock.
Descartes yesterday reported its Q2, 2014 results. The company earned (U.S.) $1.74-million on revenue of $38.2-million, which was up 25% from last year’s Q2.
Sangha says Descartes quarter was powered by its acquisition of KSD software, which contributed a better-than-expected $3.9-million in revenue, $2.5-million of which was recurring. The PI analyst says Descartes has exceptionally good visibility of future revenue and a large pipeline of orders, and has subsequently provided record guidance for Q3. He notes that shipping volumes normally fall in Q3, but points out that management says Europe and the U.S. are looking better, and China’s downturn is simply exaggerated.
In a research update to clients today, Sangha maintained his BUY recommendation and increased his target price on Descartes from (U.S.) $12.25 to (U.S.) $13.00.
Sangha says Descartes is experiencing growth across all three units of its business. Its Supply Chain Execution segment is growing because networks are becoming increasingly federated. Its Mobile Resource Management segment is in high demand across the entire industry. And its Global Trade and Compliance Solution division is growing because governments worldwide are mandating compliance solutions, for both trade and security reasons.
Shares of Descartes Systems on the TSX closed today up 2.7% to $12.25.