Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - BMO Capital has reduced its price target on Constellation Software (TSX:CSU) to C$5,400 from C$5,700 while maintaining an Outperform rating on the stock. The company, currently valued at $71.56 billion, is trading above its InvestingPro Fair Value, though it maintains strong fundamentals with a 15.88% revenue growth over the last twelve months.
The price target adjustment follows Constellation Software’s Q2 2025 results, which BMO Capital noted featured a 7% beat on EBITDA compared to consensus estimates, representing the company’s largest EBITDA beat since Q3 2023.
BMO Capital attributed the strong quarterly performance to robust operating margins, despite slower merger and acquisition activity year-to-date, excluding spinoffs.
The research firm suggested that market analysts had underestimated the positive margin impact associated with reduced M&A activity, noting that acquisitions typically have an initial dilutive effect on margins.
Despite the lower price target, BMO Capital remains bullish on Constellation Software stock, stating it believes the company can maintain a mid-teens EBITDA and cash flow compound annual growth rate (CAGR) over the medium term.
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