Descartes Systems gets small price target bump at Haywood

Following the company’s first quarter results, Haywood Securities analyst Daniel Rosenberg has inched his price target on Descartes Systems Group (Descartes Systems Group Stock Quote, Nasdaq:DSGX) up slightly.

On Wednesday, DSGX reported its Q1, 2020 results. The company earned (US) $7.32-million on revenue of $78.0-million, a topline that was up 16 per cent over the same period last year.

“Our customers continue to benefit from our investments that have expanded the Global Logistics Network with new technologies, content and trading partners,” CEO Ed Ryan said. “Our customers are passionate about sharing their many ideas on acquisitions and enhanced solutions that can benefit the broader GLN community. So, we remain focused on operating a business with strong margins and that generates cash to make these types of investments possible.”

Rosenberg says the results were in-line with his expectations. He says scale and M&A at Descartes are supporting margin expansion.

“Revenue in the quarter benefited from the recent Visual Compliance acquisition,” the analyst notes. “Management decided to increase its EBITDA margin guidance given the strong performance from recent acquisitions and better operating leverage as revenue scales.”

Ina research update to clients today, Rosenberg maintained his “Buy” rating and raised his one-year price target on DSGX from $43.50 to $44.00, implying a return of nine per cent at the time of publication.

The analyst thinks Descartes will post EBITDA of (US) $119.0-million on revenue of $324.7-million in fiscal 2020. He expects those numbers will improve to EBITDA of $135.9-million on a topline of $357.8-million the following year.