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On Friday, Morgan Stanley (NYSE:MS) adjusted its price target on Docebo Inc (TSX:DCBO). (NASDAQ:DCBO) shares, reducing it to $43.00 from the previous $61.00, while keeping an Overweight rating on the stock. The firm noted that despite Docebo’s efforts in expanding its market reach and innovating its platform and products, the company’s recent results and guidance fell short of expectations. This shortfall is attributed to a continued slowdown in growth for the year 2025, which has put pressure on the stock’s performance. According to InvestingPro data, the stock has declined over 30% in the past year, with current trading at $32.09.
The analyst from Morgan Stanley expressed that even with the revised growth figures, Docebo’s valuation remains appealing, citing the stock as being undervalued at 3.5 times sales. This valuation is seen as particularly attractive for a Software (ETR:SOWGn) as a Service (SaaS) company that is still managing to grow profitably, with impressive gross profit margins of 80.85%. InvestingPro analysis supports this view, indicating the stock is currently undervalued, while also noting strong revenue growth of 22.67% in the last twelve months. The comment suggests that the firm believes Docebo’s current stock price does not fully reflect the company’s potential for profitable growth.
Docebo specializes in cloud-based learning management systems and has been working on capturing a larger share of the market by targeting higher-end customers and continually enhancing its platform with new features. These strategies are aimed at sustaining the company’s growth trajectory and market position. InvestingPro data reveals several positive indicators, including strong cash flow coverage of interest payments and a healthy balance sheet with more cash than debt. For detailed insights and additional ProTips about Docebo’s financial health, investors can access the comprehensive Pro Research Report available on InvestingPro.
The reduction in the price target comes after Docebo reported its financial results, which showed a deceleration in growth, prompting analysts to reassess the company’s future revenue and earnings potential. Despite this deceleration, Morgan Stanley’s Overweight rating indicates that the investment firm still sees a positive outlook for Docebo in the long term.
Investors and market watchers will likely continue to monitor Docebo’s performance closely, as the company navigates the challenges of a competitive SaaS landscape while striving to deliver profitable growth. The lowered price target reflects a recalibration of expectations in light of recent developments but also underscores a continued belief in the company’s fundamental strengths.
In other recent news, Docebo Inc . released its Q4 2024 earnings, reporting an earnings per share (EPS) of $0.28, which slightly exceeded analysts’ expectations of $0.27. However, the company faced a revenue shortfall, generating $54 million compared to the anticipated $56.25 million. Despite the EPS beat, the revenue miss has raised concerns among investors. Docebo highlighted its ongoing transformation into an AI-first learning platform, with new product launches and strategic initiatives aimed at growth. The company is also pursuing FedRAMP certification by the end of Q3 2025 to enhance its competitive position in government contracts.
Additionally, Docebo is considering strategic mergers and acquisitions as part of its growth strategy. The company is focused on improving its net retention rate, which decreased to 100% from 104%, and is working to address revenue growth challenges. Analyst discussions during the earnings call touched on the company’s AI strategy and its potential impact on future product development and market competitiveness. Docebo’s leadership changes were also a topic of interest, with new appointments aimed at strengthening the company’s capabilities in the evolving AI landscape.
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