Kinaxis gets thumbs up from Laurentian Bank for Novartis win

A big customer win for Kinaxis (Kinaxis Stock Quote, Chart TSX:KXS) has earned praise from Laurentian Bank Securities analyst Nick Agostino.

This morning, Kinaxis announced that Swiss pharma giant Novartis had chosen Kinaxis’s RapidResponse as its new supply chain planning system.

“Novartis products reach nearly one billion people globally every year through a supply chain that includes thousands of suppliers and extends into most countries,” the company said in a press release today. “Using Kinaxis, Novartis aims to gain end-to-end supply chain visibility, respond more quickly to changing market demands, improve inventory management and drive down costs. Once fully implemented, Kinaxis will help Novartis drive planning standardization across all divisions of the organization and use advanced analytics to help manage the complexity of business planning.”

Agostino says this sale was a long time in the making and could lead to more business.

“From our conversations with Novartis at KXS’s User Conference in October 2018, the company required the ability to track drug expiration within its Supply Chain, and ultimately focused on KXS as its supplier given it was the only solution in the marketplace capable of meeting Novartis’ requirements,” the analyst explains. “We note Novartis is primarily an SAP firm and had been in dialogue with KXS for well over 1 year. We add Novartis was one of 16 prospects at the 2018 User Conference. The win not only adds to KXS’s penetration within SAP’s client base, but adds to its European presence and helps justify ongoing efforts by KXS within the last 15 months to bolster its sales presence and build out a data centre within that region. The Novartis win also demonstrates the ongoing demand, as reported by KXS, within the Life Sciences market (largest revenue contributor for KXS at ~30%).”

In a research “Flash” update to clients today, Agostino maintained his “Buy” rating and one-year price target of $100.00 on Kinaxis, implying a return of 39.4 per cent at the time of publication.