Kinaxis is fully valued, Industrial Alliance says

Expect longer term growth from cloud-based supply chain software company Kinaxis (Kinaxis Stock Quote, Chart, News: TSX:KXS), says Blair Abernethy of Industrial Alliance Securities, who in a research update to clients on Tuesday maintained his ”Hold” rating and $83.00 price target.

Kinaxis held its annual Investor Day on Tuesday morning, with emphasis reportedly being placed on expanding the company’s sales team by 40 per cent this year, particularly in the European and Asian markets.

Abernethy says that Kinaxis seems to be attracting more partners as more and more companies learn about its products.

“Kinaxis remains focussed on six key verticals and is approximately 35-40 per cent penetrated in its customer ~100 base,” says the analyst. “Management noted interest in the food/beverage vertical and process industries (likely but longer term). Our take: Kinaxis is steadily moving beyond the early adopter stage as interest in their solution is broadening. New customers are key to faster revenue growth as ~35-40 per cent installed-base penetration is fairly high in our opinion.”

“We came away incrementally positive on the stock as the longer term growth profile, given sales investment, partners, and potential for vertical expansion, looks to have an upward bias. However, at stock price current levels, we are maintaining our Hold rating,” says the analyst.

The analyst thinks KXS will see revenue and EBITDA in 2018 of $159.7 million and $40.7 million, respectively, and a topline and EBITDA of $197.3 million and $54.3 million, respectively, in 2019.

Abernethy’s $83.00 target price represents a 0.0 per cent return on investment as of publication date.