CVO stock is undervalued, National Bank says

After attending the company’s capital markets day, National Bank Financial analyst Richard Tse remains bullish on Coveo Solutions (Coveo Solutions Stock Quote, Chart, News, Analysts, Financials TSX:CVO).

The analyst says CVO is a real player in the white-hot AI space.

“All in, we believe Coveo remains one of the few direct plays on AI in our coverage universe, and it’s our view the Company will see an accelerating growth trajectory over the next 12 months that’s supported by a pipeline that’s up 85%,” he said. “With respect to the event, there weren’t any material incremental data points; that said, what we heard reinforced our investment thesis where we see a name with high barriers to entry that should benefit from a market tailwind (AI) combined with operational moves (particularly in marketing) designed to harvest a multi-year growth opportunity. In our opinion, Coveo carries the key attributes to monetizing that opportunity from leading (technical) IP, validated by marquee enterprise customers and partners under the leadership of a proven Management team.”

In a research update to clients November 16, Tse maintained his “Outperform” rating and price target of $14.00 on Coveo, implying a return of 40.7 per cent at the time of publication.

The analyst thinks CVO will post Adjusted EBITDA of $1.8-million on revenue of $125.5-million in fiscal 2024. He expects those numbers will improve to Adjusted EBITDA of $4.2-million on a topline of $149.2-million the following year.