A better than expected second quarter has Cormark analyst Richard Tse feeling bullish about Kinaxis (Kinaxis Stock Quote, Chart, News: TSX:KXS).
Yesterday, Kinaxis reported is Q2, 2015 results. The company earned (U.S.) $5.18-million on revenue of $23.7-million, a topline that was up 32% over the same period last year.
“Our second quarter results showed impressive growth in many areas, demonstrating the earnings power of our business model as overall revenues increase,” said Doug Colbeth, president and chief executive officer of Kinaxis. “The combination of revenue growth and strong adjusted EBITDA results highlights the uniqueness of our supply chain solutions. Given the forward revenue visibility of our business, we have raised our fiscal 2015 professional services revenue guidance to a range of $22-million to $23-million. The increase in professional services revenue, combined with our strong 26-per-cent to 28-per-cent annual growth in subscription revenue, also supports the upgrading of our annual adjusted EBITDA range to between 26 per cent and 29 per cent of total revenues.”
Tse notes that the quarter beat both his and the street’s expectations on both the top and bottom line. While some may see Kinaxis as pricey, the analyst thinks it is still undervalued.
“Bottom line, we continue to believe KXS’ valuation does not fully value the normalized opportunity,” says Tse. “For this reason, we still see upside to the stock price for investors looking for a name that has all the qualities of a market leader without being fully valued.
In a research update to clients today, Tse maintained his “Buy” rating Kinaxis, but raised his one year target to $40.00, up five dollars from his previous target of $35.00.
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