Descartes Systems still has 20 per cent upside, RBC says

Descartes Systems Group (Descartes Systems Group Stock Quote, Chart, News TSX:DSG)) just received a “Buy” rating and $67.00 per share target price from RBC Capital analyst Paul Treiber, who on Wednesday updated clients on the company.

Waterloo, Ontario-headquartered Descartes, an international logistics company with on-demand SaaS-based services for scheduling, tracking, invoicing and a full range of logistics processes, announced its fiscal second quarter 2021 financials on Wednesday, posting revenue up four per cent year-over-year to $84.0 million and adjusted EBITDA up 13 per cent year-over-year to $34.0 million. Those numbers were a shade lower than the previous quarter where revenue and EBITDA climbed seven and 15 per cent, respectively. (All figures in US dollars.)

On the results, CEO Edward J. Ryan said the past six months have cast a spotlight on the logistics industry as an essential service.

“Supply chain resilience and flexibility are now top-of-mind for governments and businesses alike,” said Ryan in a press release. “Technology and connectivity are central to navigating today’s dynamic landscape, helping to ensure the right goods and services are delivered to those that need them most. Our Global Logistics Network is well-positioned to help, by connecting shippers, carriers, logistics services providers and governments to efficiently and securely manage the lifecycle of shipments.”  

Descartes Q2 revenue was above Zacks consensus estimate by 2.7 per cent while EPS of $0.12 per share were in line with the consensus estimate.

Since hitting the bottom of the February and March market-wide pullback Descartes share price has been on a tear, climbing from $30 per share to as high as $63 earlier this month. For the year, DSGX is up 26 per cent.

At the time of publication, Treiber’s $67.00 target represented a projected 12-month return of 20.0 per cent.