Docebo keeps Buy rating with Laurentian Bank

Look for sales and EBITDA to come in just under the consensus estimates for Canadian e-learning company Docebo Inc (Docebo Inc Stock Quote, Charts, News, Analysts, Financials TSX:DCBO) in its upcoming fourth quarter report. That’s according to Laurentian Bank Securities analyst Nick Agostino, who delivered a quarterly preview on Wednesday where he maintained a “Buy” rating on the stock and $60 target price.

Docebo, which has a SaaS-based Learning Management System using AI to generate course content, track user progress and provide advanced reporting for both SME and enterprise-level companies, is set to report its Q4 on March 9 prior to the market open.

Agostino is calling for total revenue of $38.6 million, which is one per cent lower than the consensus expectation, and EBITDA at $616K, also below the Street’s forecast at $1.2 million. (All figures in US dollars except where noted otherwise.)

Agostino said he’s expecting a slowdown in growth for DCBO due to an elongating enterprise sales cycle, calling for organic growth of about 28 per cent year-over-year, which would be lower than recent quarters. The company’s Average Contract Value he expects to rise by eight per cent to $45.4 million, which would also be in contrast to double-digit growth in recent quarters. 

The analyst noted that the positive EBITDA would represent Docebo’s second consecutive quarter with positive earnings. He expects the company to add 149 new customers to bring its total count to 3,394 by the end of the 2022 year. 

“Since mid-2022, DCBO’s pipeline has been very good with a healthy mix across all segments/geographies. We look for deal activity to pick up as we move through the seasonally stronger bookings period (Q4/Q1), including the potential for larger (Enterprise) deals,” Agostino wrote.

Net cash should come in at the quarter’s end at $192.3 million, Agostino said, giving the company room to remain opportunistic with M&A to further strengthen its market position.

The analyst’s $60 target stems from a 7x multiple of his EV/Sales estimate and Agostino sees DCBO to be currently trading at 5.8x next 12 months EV/Sales versus its industry peers at 5.2x.

Looking further ahead, Agostino is calling for sales to go from $142.1 million in 2022 to $180.0 million in 2023 and for EBITDA to go from negative $0.4 million for 2022 to positive $12.6 million in 2023. 

At press time, Agostino’s maintained $60 target represented a projected one-year return of 25.1 per cent.