$DSG.TO

RBC Maintains The Descartes Systems Group's Outperform Rating and US$126.00 Price Target

RBC Capital Markets maintained its outperform rating and US$126.00 price target on the shares of The Descartes Systems Group (DSG.TO, DSGX) on Thursday, after the company reported its fiscal 2027 first-quarter financial results on Wednesday.Descartes delivered another beat and raise, said RBC and added that organic growth "continued to strengthen, despite a mixed global trade environment."Strengthening organic growth validates Descartes's innovation and value proposition, said RBC. Organic growth strengthened to ~9% from 8% last quarter, despite reduced global freight shipments in the quarter, added RBC."Increased organic growth stems from adoption of Descartes's trade content, e-commerce solutions, routing & scheduling amid higher fuel costs, and freight visibility (i.e., MacroPoint)," said RBC.Descartes's customers are "increasingly utilizing more software" to help manage their operations, in light of increasing supply chain complexity and disruptions, RBC stated.Descartes is investing in the development of a new agentic AI layer on top of its core network, noted RBC.RBC believes AI agents leading to automated workflow will "increase the value and stickiness" of Descartes's network, while also creating new consumption-based revenue streams."AI agents increase visibility to the moat around Descartes's core business in an AI era," said RBC.RBC sees "compelling risk-reward, given healthy organic growth, continued margin expansion, and the likelihood of additional M&A," it said."With Descartes trading at the low end of its historical valuation range, we see attractive risk-reward on the stock," added RBC.Price: $110.10, Change: $+7.22, Percent Change: +7.02%

Descartes Systems Price Targets Adjusted at CIBC, Raymond James

Analysts at CIBC Capital Markets and Raymond James adjusted their price targets on Descartes Systems Group Inc. (DSG.TO, DSGX).CIBC Analyst Stephanie Price raised her price target on the Canadian multinational software company to US$118 from US$116, and maintained an Outperformer rating following its Q1 results."The freight environment remains volatile, with Descartes noting lower shipment volumes in the quarter," Price said in a note to clients."Descartes continues to roll out AI agents to help clients monitor and respond to logistics disruptions and is leveraging AI internally to improve efficiency," the analyst said."The company remains well capitalized, with $377 Million in net cash to spend on M&A and/or its NCIB," Price said.Raymond James analyst Steven Li lowered his price target to US$108 from US$118, and maintained an Outperform rating."Fundamental set-up looks strong with improving organic growth into easier comps," Li said in a note to clients."M&A set-up sounded good, too, and we believe combined with the improving organic growth, could push A-EBITDA into a period of heightened growth (high-teens, this 1Q already A-EBITDA was +20% y/y)," the analyst said."This level of EBITDA growth has compounding implications as over the last 10 years; DSGX has converted on average 84% of its A-EBITDA into FCF like clockwork."

Descartes Systems Group Reports Higher Profit, Revenue for Fiscal First Quarter; Slips 4.6% After Hours

Descartes Systems Group (DSG.TO, DSGX) was last seen down 4.6% in after-hours Nasdaq trade after the company on Wednesday said its fiscal first-quarter profit and revenue rose year-over-year.The company earned US$48.5 million, or US$0.55 per share, in the period, up from US$36.2 million, or US$0.41, a year ago. FactSet expected US$0.52 per share.Revenue rose to US$193.6 million from US$168.7 million in the year-prior quarter. FactSet projected US$191.6 million. The company said revenues consisted mainly of US$180.5 million in services revenue, US$11.5 million in professional services and other revenue, and US$1.6 million in license revenue."The global trade landscape remains extremely challenging as supply chain participants look to keep up with increasingly dynamic conditions. Our network provides the timely, accurate and reliable data needed to fuel both AI-powered solutions and existing systems of record that are deeply embedded in logistics operations," Chief Executive Edward Ryan said.The company's shares were last seen down US$3.44 to US$70.67 after hours. They closed down C44.44 to C$102.88 on the Toronto Stock Exchange.

RBC Maintains The Descartes Systems Group's Outperform Rating and US$126.00 Price Target

RBC Capital Markets maintained its outperform rating on the shares of The Descartes Systems Group (DSG.TO, DSGX) and its price target of US$126.00 on Thursday, and provided a first-quarter preview for the company.Descartes is reporting Q1/ FY27 on June 3, said RBC.RBC expects Descartes to report Q1 "moderately above consensus", driven by organic growth momentum against conservative consensus estimates."We expect Q1 revenue up 15% Y/Y to (US)$195MM, above consensus at (US)$191MM," said RBC.The upside compared to consensus reflects sustained organic growth momentum, along with overly conservative consensus estimates, it added."Due to operating leverage, we forecast Q1 adj. EBITDA up faster than revenue (19% Y/Y) to (US)$89MM, modestly above consensus at (US)$87MM and ahead of Descartes's long-term target of 10-15% growth," said RBC. "Similarly, we forecast GAAP EPS of (US)$0.54, slightly above consensus at (US)$0.52."RBC expects organic growth to stem from upselling, market share gains, e-commerce momentum, and increased adoption of customs filing solutions, despite a continued mixed trade environment."Our Q1 revenue estimate equates to 118.6% of baseline, in line with Descartes's TTM average and down from 119.7% last quarter," RBC said. "We believe consensus at 116.6% of baseline is overly conservative and likely assumes 50 bps Q/Q organic growth deceleration."With likely continued organic growth and contribution from the US$28 million Idelic acquisition, RBC expects Q2 baseline to exceed consensus as well."We believe Descartes may provide Q2 baseline of (US)$169MM revenue and (US)$66MM adj. EBITDA, implying Q2 actuals of (US)$200MM (11% Y/Y) and (US)$92MM adj. EBITDA (15% Y/Y), slightly above consensus at (US)$199MM and (US)$91MM," RBC added.RBC sees Descartes's valuation as "compelling", given RBC's forecast for 15% adj. EBITDA CAGR and 18% FCF/ share CAGR over the next 2 years.Its price target is unchanged and remains based on 25x CY27e EV/EBITDA, RBC stated."We see attractive risk-reward on the shares, given valuation near 10- year lows," added RBC. "Maintain Outperform."

Descartes to Acquire Idelic For US$28 Million

The Descartes Systems Group (DSG.TO) has acquired Idelic, which provides AI-powered driver safety solutions, for US$28 million cash, the company said on Thursday.Descartes may also pay a performance-based consideration of up to $12 million cash, if the combined business achieves revenue-based targets in each of the first two years post-acquisition.Idelic's safety intelligence platform unifies daily safety management activities such as training, monitoring, reporting and coaching into a single solution. Fleets can proactively identify and reduce driving risk by using the platform's unique dataset of more than 40 billion miles of telemetry and over 400,000 accident records, a statement said."The need for trusted, real-time fleet and operational data is becoming increasingly critical as customers advance their AI strategies," said Descartes chief executive Edward Ryan. "By combining Idelic's predictive safety intelligence and unique, critical data with Descartes' GLN [Global Logistics Network], we're strengthening the data foundation that powers smarter fleet performance decisions and safer, more efficient operations."Idelic is headquartered in Pittsburgh, Pennsylvania.Descartes shares closed down $0.95, to $102.90 on Wednesday on the Toronto Stock Exchange.

Descartes Buying Idelic For Up-front Consideration of Near US$28M, Satisfied With Cash On Hand, Plus Potential Performance-based Consideration

Descartes Acquiring Idelic, a Provider of AI-powered Driver Safety and Performance Management Solutions

CIBC Lowers Price Target on Software and Services Stocks

CIBC Capital Markets lowered its price target on eight software and services stocks ahead of Q1 results for the sector."We expect high single-digit growth in revenue and EBITDA within our coverage in Q1, despite AI-disruption concerns that have reduced the market cap of our Software coverage by an average of 24% year to date," analyst Stephanie Price said in a note to clients."With limited AI-related read-throughs from near-term earnings, investors have been reducing multiples and rethinking terminal values," Price said."For Q1, we are roughly in line with consensus expectations," the analyst said. "We expect a volatile earnings season and a focus on AI narrative for companies that meet or beat consensus expectations.""We expect that earnings misses could result in outsized market reactions," Price said. "That said, with an average 8% consensus EBITDA growth expectation for the quarter, we also see the possibility of upside from multi-year valuation lows."Price made the following changes:CGI Inc. (GIB-A.TO) to $112 from $132 (Neutral)Computer Modelling Group Ltd. (CMG.TO) to $5 from $5.50 (Neutral)Constellation Software Inc. (CSU.TO) to $4080 from $4610 (Outperformer)Descartes Systems Group Inc. (DSG.TO, DSGX) to US$116 from US$126 (Outperformer)Docebo Inc. (DCBO.TO, DCBO) to US$28 from US$34 (Outperformer)Kinaxis Inc. (KXS.TO) to $171 from $203 (Outperformer)Open Text Corp. (OTEX.TO, OTEX) to US$27 from US$32 (Neutral)Thomson Reuters Corp. (TRI.TO, TRI) to US$124 from US$140 (Outperformer)(covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www..com/contact-us)

The Descartes Systems Expands AI Innovation on Global Logistics Network With Fleet Data Intelligence Platform

The Descartes Systems Group (DSG.TO, DSGX) announced Tuesday that it expanded artificial intelligence capabilities on its Global Logistics Network (GLN) with the introduction of the Descartes Fleet Data Intelligence platform.The company said the platform combines a new AI agent and machine learning (ML) capabilities to enhance on-time delivery, strengthen service level compliance and reduce cost per delivery while providing the visibility needed to measure, sustain and scale fleet performance improvements over time."For fleets operating private or dedicated distribution networks, the highest-impact opportunity for AI lies in improving real-world execution," said Descartes Fleet Management General Manager James Wee. "With the Fleet Data Intelligence platform, we apply AI to the trusted execution data flowing through the GLN to separate signal from noise and turn everyday fleet operations into a continuous source of learning and improvement."Shares of the company closed up 5% to $91.69 on Monday on the Toronto Stock Exchange.