Buy beaten-down Sylogist, this analyst says

Paradigm Capital analyst Daniel Rosenberg reaffirmed his “Buy” rating and $10.00 target price for Sylogist (Sylogist Stock Quote, Chart, News, Analysts, Financials TSXV:SYZ) in a Sept. 26 research note, arguing the Calgary-based Enterprise Resource Planning provider is exiting a transition period and positioned for stronger growth as it expands its SaaS mix and capitalizes on government spending.

“Restructuring efforts that began in late 2020 are beginning to bear fruit,” he said. “New leadership, investment in new products, and a strengthened partnership with Microsoft have led to meaningful improvement in reputation and customer loyalty. Today, Sylogist is benefiting with double-digit organic growth with very healthy Adjusted EBITDA margins in the mid-20 percentage range. With a generational government infrastructure spending cycle in the U.S., Sylogist is well positioned to win significant market share in the fragmented mid-market.”

Sylogist shares are down about 13% since receiving a Sept. 10 requisition for a special meeting from activist investor OneMove Capital, which raised concerns about margin compression, missed commitments, and stock price underperformance. In response, the company formed a special committee of three independent directors with backgrounds at eBay, Splunk, Oracle, Uber, and Ritchie Bros. to oversee shareholder engagement. Rosenberg acknowledged some merit to OneMove’s concerns but emphasized recent operating momentum, including record bookings and a 33% year-over-year increase in Q2.

He also highlighted improving revenue quality as SaaS revenue now accounts for 50% of the mix, up from 40% in 2023, and noted a partner strategy yielding a 70% win rate.

“We believe as SaaS increasingly represents a larger share of overall revenue that it could drive higher valuation levels for Sylogist,” he said.

Sylogist ended its last quarter with $4.8-million in cash and $19.1-million in debt, alongside an untapped $50-million credit facility and $75-million accordion feature for potential M&A. With restructuring complete, Rosenberg sees optionality to accelerate growth through acquisitions, this time with systems in place to avoid missteps from prior leadership.

“We believe Sylogist disappointed investors last quarter, which led to reset expectations,” he said. “But we view this to be, by and large, a matter of communication rather than anything fundamentally wrong with the underlying business. In contrast, we see growing bookings, strong retention and a transition that is taking root. We think it is an opportune time to buy SYZ shares as its large bookings numbers should convert into revenue as we move into 2026.”

Rosenberg values the shares using a blended EV/EBITDA multiple and discounted cash flow, applying a 16.0 times multiple to his 2026 forecast and an 11.0 per cent WACC. Shares trade at 11.4 times projected 2026 EBITDA, versus peers at 22.7 times.

He forecasts Adjusted EBITDA of $10-million on revenue of $64.9-million in fiscal 2025, improving to $14.6-million on $69.5-million in fiscal 2026.

Founded in 1993, Sylogist provides ERP solutions to public sector clients including school boards, state agencies, nonprofits, and international NGOs.

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