In a research update to clients today, Abernethy maintained his “Hold” rating and one-year price target of $23.00 on Descartes, implying a return of 1.1 per cent at the time of publication.
Abernethy says there were a couple key takeaways from the conference. The first is that he expects M&A to be the key revenue driver for the company, and that internally it is focused on “incremental” innovation, with a lot of focus on the integration of recently acquired products. Shares of Descartes have more than doubled since 2014, but the analyst says 2017 is not a year he expects any crazy upside.
“In our opinion, it is “steady as she goes” at Descartes this year, Abernethy says. “We don’t see anything transformative happening on the product or partner front, or anything highly disruptive or risky occurring on the horizon.”
Abernethy thinks Descartes will generate EBITDA of $78.5-million on revenue of $227.2-million in fiscal 2018. He expects these numbers will improve to EBITDA of $84.1-million on a topline of $240.4-million the following year.
