Descartes (DSGX) PT Raised to $120 at Scotiabank

Scotiabank analyst Paul Steep raised the price target on Descartes (NASDAQ: DSGX) to $120.00 (from $104.00) while maintaining a Sector Outperform rating.

The analyst commented: "DSGX benefits from its exposure to logistics & supply chain SW (high demand) and commands an impressive “Rule-of-50” organic services growth + EBITDA profile. Shares trade at ~12x CY25 sales, but are more reasonable on EBITDA at ~27.0x when compared to the company’s closest publicly traded peers MANH (~42.5x) and Wistech (~44.0x). While we’re expecting a slight moderation in organic services growth in Q3 at 7.0% vs. the ~8%-9% levels seen over the past several quarters (was ~7.0% in Q2), we view this as still strong performance alongside Adj. EBITDA margins ~44% for a solid “Rule-of-50” operating profile. Meanwhile, there remains upside from potential M&A given the company’s strong balance sheet (we estimate ~$140M cash and no debt post recent SellerCloud acquisition) and pipeline of targets. We recently attended DSGX’s Innovation Forum where we gained even greater conviction on the name. We’ve updated our target to $120 (previously $104) reflecting a valuation of ~30.0x FY26 EBITDA (prior ~26x) to acknowledge the upward move in peer group multiples."

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