Scotiabank raises Descartes stock price target to $127

On Wednesday, Scotiabank (TSX:BNS) analyst Paul Steep increased the price target for Descartes Systems Group (NASDAQ:DSGX) to $127 from the previous target of $125, while maintaining a Sector Outperform rating on the company’s shares. According to InvestingPro data, analyst targets for DSGX currently range from $91.20 to $137.00, with the company receiving a "GREAT" financial health score of 3.15 out of 5. The adjustment follows Descartes’ announcement of its first acquisition for the fiscal year 2026, purchasing 3GTMS (3G) for $115 million. This move adds a Transportation Management System (TMS) that caters to Enterprise and Large Shippers to Descartes’ expanding portfolio of transportation management technology solutions.

The acquisition is part of a continuing trend for Descartes, which completed five deals in the fiscal year 2025. Analysts anticipate that the company may engage in further mergers and acquisitions (M&A) activity in the fiscal year 2026. Descartes’ management had hinted on their most recent earnings call that shifting market conditions could present additional opportunities to enhance their offerings through acquisitions.

Descartes is well-positioned to pursue such opportunities, with an estimated cash balance of approximately $195 million post-acquisition and no debt on its books. The company also has an untapped $350 million line of credit at its disposal. Steep highlighted Descartes’ attractive "Rule-of-50" operating profile, which combines growth and profitability metrics.

Despite trading at a high multiple of 10.2 times its calendar year 2026 sales, Descartes’ valuation appears more favorable when considering its EBITDA, trading at 22.2 times its estimated calendar year 2026 EBITDA. This compares positively to its closest peers, Manhattan Associates (NASDAQ:MANH) and WiseTech Global (WTC), which trade at 26.5 times and 30.0 times their respective calendar year 2026 EBITDA. Current InvestingPro analysis indicates the stock is trading above its Fair Value, with a P/E ratio of 62.8 and an EV/EBITDA of 33.4, suggesting investors should carefully consider entry points.

In other recent news, Descartes Systems Group has seen several analysts adjust their outlooks following the company’s recent financial performance. RBC Capital Markets lowered their price target for Descartes from $133.00 to $130.00, maintaining an Outperform rating despite noting lighter than anticipated organic growth. They highlighted that ongoing tariff uncertainties could boost demand for Descartes’ supply chain management software in the long term. Similarly, BMO Capital Markets reduced their price target from $120.00 to $113.00, keeping a Market Perform rating, citing revenues slightly below expectations for the fourth quarter of fiscal year 2025. BMO’s analysis also pointed to potential challenges from tariff uncertainties affecting shipping volumes and organic growth.

Stephens also adjusted their price target for Descartes, lowering it to $137 from $145, while maintaining an Overweight rating. Analyst Justin Long expressed confidence in Descartes’ ability to capitalize on global trade disruptions and highlighted the company’s strong merger and acquisition program. RBC Capital Markets had previously maintained a $133.00 price target and noted a projected 17% year-over-year increase in adjusted EBITDA for the fourth quarter, slightly above consensus estimates. They also emphasized the potential benefits from global tariff uncertainties and strategic acquisitions as catalysts for growth. These developments reflect a cautious yet optimistic outlook from analysts on Descartes’ ability to navigate current market conditions.

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