Cantor Fitzgerald analyst Justin Kew has been talking to customers of Descartes Systems Group (TSX:DSG), and is liking what he is hearing.
Kew spent time this week at Descartes’ annual user conference in Miami and noticed that talks with the company’s customers revealed recurring themes.
Many, he said, are reporting “significant and immediate” returns after implementing the company’s solutions. Descartes, he says, is earning loyalty because it is seen as solving complex logistics and compliance issues that would otherwise weigh heavily on an organization.
Kew notes that this year’s user conference boasted more than 400 attendees from more than 140 companies, making it Descartes’ largest yet. The Cormark analyst believes this reflects the company’s expanding influence in the global logistics community, and was underscored by the presence of new customers like Honeywell and IKEA.
In a research update to clients this morning, Kew maintained his BUY recommendation on Decartes, but raised is target from $13.00 to $15.00. He says he came away from the conference “as bullish as ever” on the company.
Kew’s new target is based on 16x his expectations for Descartes’ fiscal 2015 EV/EBITDA, a number he believes is justified by management’s demonstrated ability to deliver profitability in both weak and strong economic environments.