TD lowers price target on Coveo Solutions

TD Cowen analyst David Kwan says Coveo Solutions (Coveo Stock Quote, Chart, News, Analysts, Financials TSX:CVO) remains an attractive potential takeout target, but the company’s path back to stronger organic growth still looks uneven.

As reported by the Globe and Mail, on May 28, Kwan maintained his “Buy” rating on Coveo but lowered his target price to $6.50 from $9.50, below the $7.80 average.

“The road back to 20-per-cent-plus organic growth remains a rocky one, as sales execution/efficiency issues continue to hinder CVO’s growth profile and valuation,” Kwan said. “We expect the stock to be weak near term on the disappointing growth guidance and think CVO will be (more) active with its buyback (possibly with another SIB). We view CVO as an attractive takeout target, and note that Canadian small-cap tech M&A remains active.”

The update followed Coveo’s fourth-quarter and fiscal 2026 results, released May 27. The company reported fourth-quarter SaaS subscription revenue of $35.9-million, up 10% from $32.6-million a year earlier, while total revenue rose nine per cent to $37.4-million from $34.4-million.

For fiscal 2026, SaaS subscription revenue increased 13% to $142.5-million, while total revenue rose 11% to $148.3-million. Coveo reported a full-year net loss of $28.9-million, compared with a loss of $13.8-million a year earlier, and Adjusted EBITDA of negative $0.8-million, compared with positive $1.0-million in fiscal 2025.

Coveo said it ended the year with its strongest fourth-quarter new business performance in company history, including its largest new customer deal for the second consecutive quarter.

“Fiscal 2026 marked another year of meaningful progress for Coveo as organizations increasingly turned to our platform to power AI-driven digital experiences,” CEO Laurent Simoneau said. “We closed the year with the strongest fourth quarter new business performance in our history, including another landmark enterprise win representing the largest new customer deal in our history for the second consecutive quarter.”

The company said commerce remained its fastest-growing use case, representing nearly 60% of total new business bookings, while year-over-year Generative AI customer count nearly doubled. SaaS ACV attributable to Coveo Generative AI solutions now represents 13% of total SaaS ACV.

Coveo ended the quarter with $101.9-million in cash and cash equivalents. During fiscal 2026, the company repurchased 4.4-million subordinate voting shares at a weighted average price of $6.83 per share for total consideration of $22.0-million.

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