Sylogist price target trimmed at Ventum

Following what he describes as “mixed” results, Ventum Capital Markets analyst Amr Ezzat has cut his price target on Sylogist (Sylogist Stock Quote, Chart, News, Analysts, Financials TSX:SYZ).

On March 13, SYZ reported its Q4 and fiscal 2024 results. In the fourth quarter, the company posted Adjusted EBITDA of $3.2-million on revenue of $15.3-million, down 1.3%, year-over-year.

“Our Q4 performance reaffirms the success of our transition to a SaaS-driven enterprise,” CEO Bill Wood said. “We are pleased with our go-to-market execution and the momentum we’ve built. While transitioning project service revenue—such as new implementations and customer upgrades—to partners may temporarily impact top-line growth, it is a strategic move designed to enhance long-term operating leverage and scalability. We are confident that replacing this handed-off revenue with high-margin SaaS revenue will drive even greater value for our shareholders.”

Ezzat says there are green shoots that investors can take comfort in, even as these results might appear at first blush to be underwhelming.

“Sylogist Ltd. delivered mixed Q4/24 results, with revenues slightly below expectations and a more pronounced EBITDA shortfall versus consensus. However, bookings surged 56.6% YoY, reinforcing visibility into stronger growth in future quarters,” he wrote. “As we’ve emphasized in previous notes, our focus remains firmly on accelerating SaaS growth rather than near-term total revenue fluctuations. The transition to a partner-led implementation model naturally weighs on current revenue but positions Sylogist for scalable SaaS expansion. To that end, SaaS revenue grew 9.6% YoY (14.7% YoY ex-divestitures), with SylogistEd showing the strongest momentum (16.5% YoY).”

In a research update to clients March 13, the analyst maintained his “Buy” rating but cut his price target on SYZ from $13.50 to $13.00, implying a return of 50.1% at the time of publication.

Ezzat thinks SYZ will post EBITDA of $17.5-million on revenue of $69.9-million in fiscal 2025. He expects those numbers will improve to EBITDA of $23.6-million on a topline of $79.4-million in fiscal 2026.

“We are refining our forecasts to reflect a steeper-than-expected decline in Project Services and Maintenance & Support revenues,” he concluded. “However, our SaaS revenue forecasts remain unchanged for 2025 and beyond, reinforcing our confidence in the long-term growth trajectory.”