Descartes Earnings: The Firm Performs Well With a Pulse on the Changing Industry; FVE Up 6% to $72

Descartes reported strong first-quarter results, with revenue and adjusted EBITDA coming in above our estimates. Management noted continued normalization of the shipping industry toward its prepandemic state, as United States container imports increase, port delays lessen, and the freight spot price decreases. We were also pleased to hear integration efforts following the recent acquisitions of both Localz and GroundCloud are underway. With integration efforts and persistent currency headwinds expected to weigh on near-term results, management provided a prudent outlook and maintained its 40%-45% adjusted EBITDA margin outlook for the fiscal year. We view headwinds as transitory and hold our long-term view that Descartes is well-positioned to address the heightening complexity of global transportation networks. With this, we are raising our fair value estimate to $72 (CAD 98) per share, from $68 (CAD 91) previously, and view the shares as slightly overvalued.