Copperleaf Technologies is undervalued, BMO says

Its stock has done well this year, but BMO analyst Thanos Moschopoulos thinks there is still money to be made on Copperleaf Technologies (Copperleaf Technologies Stock Quote, Chart, News, Analysts, Financials TSX:CPLF).

As reported by the Globe and Mail April 19, the analyst, in an update to clients, reiterated his “Outperform” rating on CPLF but raised his price target on the stock from $8.00 to $9.00.

Moschopoulos says the company has struggled since going public but appears poised for a rebound.

““CPLF had a long history of profitability prior to its IPO, and returning to profitability is a key objective. Incremental hiring will be focused on revenue-generating roles (e.g., quota-carrying sales and billable consultants), while R&D/G&A hiring will be constrained through FY24/25,” he wrote. “CPLF believes it’s well-positioned to scale given the structural elements and leadership, with global coverage, that it already has in place.”

The analyst says a relatively recent shakeup at the top could begin to bear fruit.

“CEO Paul Sakrzewski was appointed to the role in Jan. 2023 and spent his first year improving the go-to-market, leveraging his prior experience as an SAP executive,” Moschopoulos noted. “This included the establishment of a centralized value engineering team (which develops custom business cases outlining the anticipated ROI that a client should achieve on CPLF’s software), led by an ex-McKinsey consultant; centralized industry specialists; better processes/discipline with respect to pipeline management and forecasting; more aggressive performance management of the salesforce; and the establishment of key partnerships with Accenture and SAP. The return to in-person sales, following the pandemic, has also been helpful. We believe these factors contributed to the 30-per-cent year-over-year ARR [average recurring revenue] growth that CPLF reported in its most recent quarter.”