In a research update to clients today, Agostino maintained his “Buy” rating on Kinaxis, but raised his one year target price on the stock from $37.50 to $46.00, implying a return of 18.2% at the time of publication.
Agostino detailed what he is expecting from the upcoming quarter.
“We estimate overall YoY revenue growth of 26.1%, following 32.2% YoY growth in Q2/15,” he said. “More importantly, we look for Subscription revenue of US$17.2M yielding 29% YoY growth, above KXS’s guidance of 26-28% annualized growth and in line with the YoY growth average over the last 6 quarters, and versus 31% posted in Q3/14. Our strong subscription growth forecast is supported by increasing deal sizes (estimated at ~US$700k in recurring revenue per customer in 2015, growing at a ~13% 2-year CAGR), aided by channel partners such as SIs.”
Agostino explains that his target raise, however, comes because he has introduced 2017 estimates into his model. The analyst believes the company will see 30% topline growth that year, a number that is similar to his 2016 expectation. Agostino thinks Kinaxis’s revenue will hit $117-million in 2016 and will climb to $151.1-million the following year. He thinks the company will generate EBITDA of $33.9-million in 2016 and $45.3-million in 2017. He notes that his revenue and EBITDA expectations are both street highs.
Ottawa-based Kinaxis lead offering is RapidResponse, a supply chain planning and analytics platform to manage multiple, interconnected supply chain management and Sales and operations planning (S&OP) processes.