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Docebo is a Canadian tech star, National Bank Financial says

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DoceboLooking for a diamond in the rough in the Canadian tech scene? Then e-learning platform Docebo (Docebo Stock Quote, Chart, News TSX:DCBO) could be your ticket.

After a new financing round, National Bank Financial analyst Richard Tse has resumed coverage of the company on Thursday, arguing that the company’s strong product offering, efficient capital allocation and expanding partnerships make it a winner.

Toronto-based Docebo offers a cloud-based, artificial intelligence-powered elearning platform for businesses to train internal and external workforces, partners and customers.

The company on Thursday announced the completion of a bought deal offering for aggregate gross proceeds of $75 million, comprised of 1.5 million common shares at $50 per share. Docebo plans to use the net proceeds to strengthen its balance sheet and to pursue its growth strategies which include pursuing acquisitions.

After the offering, Tse said his investment thesis on Docebo remains unchanged and judged the company to be in the early innings of a developing growth story with a multi-year runway, one which has yet to be priced into the stock.

“We continue to like this name for the same reasons outlined in our previous research notes, most important is that a differentiated product offering led by technology and a highly efficient sales and marketing model is putting Docebo in a position to make meaningful market share gains,” Tse wrote. “If that weren’t enough, we think the current work-from-home theme is an obvious added boon to the Company’s momentum.”

Tse lists a number of reasons to be bullish on Docebo, including its differentiated platform which has proven itself through major brand wins, its history of being a prudent allocator of capital which is generating 1.3x incremental revenue for each dollar spent in sales and marketing, according to Tse, a meaningful opportunity for operating leverage as the company scales and, over and above these points, Docebo’s original equipment manufacturer partnerships which the company has been building out for years.

“The Company is already benefiting from its growing OEM relationship with Ceridian, which has since become Docebo’s largest customer. We see more partnerships on the way, providing an incremental growth driver,” Tse said.

“Bottom line, we continue to believe DCBO is an under the radar tech name has the chops to play with all the other Canadian tech stars,” he said.

Tse expects Docebo to generate fiscal 2020 revenue and adjusted EBITDA of $61.3 million and negative $6.6 million, respectively, and fiscal 2021 revenue and adjusted EBITDA of $82.4 million and negative $1.0 million, respectively.

With the new report, Tse has reiterated his “Outperform” rating and target price of $60 per share, which implies a 15x EV/Sales multiple on Tse’s fiscal 2021 estimates and at press time translated to a projected 12-month return of 21.2 per cent.

Docebo’s share price is currently up 194 per cent year-to-date ad up 32 per cent over the past month. DCBO’s current market cap is at $1.072 billion.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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