TD Cowen ups target on Coveo to $7.00

TD Cowen analyst David Kwan says Coveo Solutions’(Coveo Solutions Stock Quote, Chart, News, Analysts, Financials TSX:CVO)  largest customer win to date should improve investor sentiment and could make fiscal 2027 guidance look conservative.

As reported by The Globe and Mail, in a July 31 update, Kwan maintained his “Buy” rating on Coveo and raised his target to $7.00 from $6.50. The average target is $6.25.

“We think winning its first $10-million ARR customer should help bolster sentiment and the stock,” Kwan said.

Coveo reported Q1 fiscal 2027 revenue of US$38.5-million, up 8% from a year earlier. SaaS subscription revenue rose 9% to US$37.4-million, while revenue from Coveo’s core platform increased 13%.

Adjusted EBITDA was US$100,000, compared with a loss of US$1.9-million a year earlier. Cash flow from operating activities was US$9.2-million, up from US$7.1-million.

After quarter-end, Coveo signed the largest transaction in its history with a Fortune Global 500 technology company, bringing that customer’s annualized SaaS subscription spend to eight figures. Kwan said he believes the customer is SAP.

Coveo also secured another seven-figure expansion with a Fortune 500 healthcare products distributor, which now uses Coveo across knowledge and commerce applications.

CEO Laurent Simoneau said the large customer expansion shows Coveo’s role as enterprises scale AI initiatives across customer-facing and internal applications.

Coveo said AI is part of nearly every new customer opportunity, with generative AI capabilities featured in almost every new customer discussion. New and existing customer wins included Nespresso, Linde, Enbridge, Conforama Iberia, Fleetpride, Forcepoint, Familiprix, Brandbank Group and Littelfuse.

Kwan said the reiterated fiscal 2027 guidance could prove conservative given the large customer win and another $1-million-plus annual recurring revenue expansion.

The analyst noted that Coveo trades at 1.1 times calendar 2027 EV/revenue, which he described as an IT services-type multiple, leaving a compelling risk/reward with several catalysts ahead.

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