Analyst Note| Dan Romanoff, CPA |
Narrow-moat Descartes delivered strong results, with revenue and adjusted EBITDA nicely ahead of our expectations. We view Descartes as being increasingly well-positioned to address the heightening complexity of global transportation networks, with the acquisition of GreenMile during the quarter nicely complementing existing routing solutions and cementing a leadership position for the company in global routing and scheduling for private fleets. As Descartes’ increasingly comprehensive portfolio grows, both organically and through bolt-on acquisition activity, we expect the company’s investment goals around distribution capabilities and customer implementation resources to create a virtuous circle for revenue growth. Based on results, recent acquisitions, and strengthening industry tailwinds, we are raising our fair value estimate to $67 (CAD 84) from $56 (CAD 70) per share and see shares as fairly valued at current levels.