This analyst just raised his price target on D2L

National Bank Financial analyst Doug Taylor says D2L’s (D2L Stock Quote, Chart, News, Analysts, Financials TSX:DTOL) first-quarter results showed improving ARR trends and “compelling value for a well-positioned software asset.”

In a June 11 update, Taylor maintained his “Outperform” rating on D2L and raised his target to $15.00 from $14.00.

D2L reported first-quarter fiscal 2027 revenue of $57.1-million, up 8.1% year-over-year and ahead of consensus at $56.2-million. Adjusted EBITDA was $8.3-million, down $1.0-million from a year earlier but above the Street’s $7.8-million forecast. Net income was $1.7-million, or three cents per share, compared with $3.3-million, or six cents, a year earlier.

“Annual recurring revenue (ARR) growth was 8% CC year-over-year in FQ1, extending the positive trend over two quarters since this key figure troughed in FQ3’26,” Taylor said.

Excluding isolated K-12 churn, which is expected to fade after the second quarter, constant-currency ARR growth was 11.4%. Taylor said management cited strong conversion rates, competitive win rates and a robust pipeline despite subdued RFP activity in North American higher education.

He said further reacceleration toward more than 10% ARR and SaaS growth remains a key valuation driver, with D2L targeting 10% to 15% growth in fiscal 2028.

Taylor said profitability is being temporarily held back by platform transition costs, which should fade by the end of the second quarter. He said the company’s 15-per-cent EBITDA margin guide for this year appears achievable, with the margin expected to move toward its 18% to 20% fiscal 2028 target.

Taylor also pointed to D2L’s cash position, with US$95.7-million last reported and continued cash generation expected, as support for more aggressive buybacks and a substantial issuer bid.

The analyst raised his revenue estimates, citing a stronger SaaS quarter, improving ARR trends and guidance that looks increasingly conservative given an expected second-half growth pickup and the lapping of U.S. K-12 churn.

Taylor said D2L screens inexpensive relative to its cash generation and strategic learning management system position, with upside from sustained double-digit growth excluding K-12, Lumi-driven wins and upsells, and progress toward the company’s fiscal 2028 margin target.

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