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On Thursday, BMO Capital Markets adjusted its outlook on Descartes Systems Group (NASDAQ:DSGX), reducing the price target from $120.00 to $113.00, yet maintaining a Market Perform rating on the stock. With a market capitalization of $9.5 billion and trading at a P/E ratio of 68.7, InvestingPro analysis indicates the stock is currently trading above its Fair Value. The adjustment comes in the wake of the company’s fourth-quarter results for fiscal year 2025, which showed revenues slightly below expectations and EBITDA figures that met projections.
Thanos Moschopoulos, an analyst at BMO Capital, provided insights into the decision, stating that the firm had slightly lowered its estimates after reviewing the Q4/25 performance. Despite revenues being marginally lower and EBITDA in line with expectations, the forecast for the first quarter of fiscal year 2026 also appeared to be modestly below expectations by approximately 1% for both revenue and EBITDA. According to InvestingPro data, the company maintains strong financial health with a 75.4% gross profit margin and 14.9% revenue growth over the last twelve months.
Moschopoulos expressed confidence that Descartes could maintain its target of 10-15% annual EBITDA growth. However, he also noted potential challenges ahead, specifically mentioning that tariff uncertainties could negatively impact shipping volumes and organic growth in the near term. This, in turn, might limit the stock’s multiple, leading to the revised target price.
In his commentary, Moschopoulos conveyed a cautious stance on Descartes’ near-term prospects due to these macroeconomic factors. The analyst highlighted the company’s ability to achieve its growth targets but acknowledged that external pressures could pose risks to the stock’s valuation.
Descartes Systems Group, which specializes in logistics and supply chain management software, has not publicly responded to the revised price target. The company’s stock performance will continue to be observed by investors as it navigates the forecasted industry headwinds.
In other recent news, Descartes Systems Group Inc (TSX:DSG). has been the focus of several analyst reports. RBC Capital Markets maintained their Outperform rating on Descartes with a price target of $133, citing potential benefits from global tariff uncertainty and predicting a 17% year-over-year increase in adjusted EBITDA for Q4. Meanwhile, Stephens adjusted their price target for Descartes to $137 from $145, while maintaining an Overweight rating, emphasizing the company’s strong positioning amid global trade challenges. Stephens’ analyst highlighted Descartes’ potential for growth through its robust merger and acquisition strategy.
Loop Capital initiated coverage on Descartes with a Buy rating and a price target of $140, pointing out the company’s advantageous position in the evolving trade landscape. Loop Capital noted that Descartes offers automation solutions that are increasingly valuable due to the complexity of international trade regulations. The firm suggested that current market conditions are favorable for Descartes, despite its stock approaching the higher end of its valuation range. These developments reflect a broader confidence in Descartes’ ability to navigate and capitalize on the shifting global trade environment.
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