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Investing.com -- TD Cowen said it has greater confidence in Dayforce Inc (NYSE:DAY) ability to outperform consensus mid-term free cash flow margin expectations and secure a key contract with the government of Canada following a recent meeting with CFO Jeremy Johnson.
The note highlighted that Dayforce continues to see a strong demand environment, including in Canada, with no tariff-related impacts. The company also conveyed confidence in securing the Canadian government opportunity, with no expected delays in decision-making.
The government of Canada indicated in late January that a decision is expected by late March, the note stated.
Professional services work for the government of Canada remains ongoing, with additional work anticipated in fiscal 2025, supporting growth in non-recurring revenue.
TD Cowen noted that recurring revenue is expected to ramp up in the second half of FY25 as pilot programs transition.
TD Cowen addressed investor concerns about relative valuation and growth risks linked to Canadian exposure, stating that DAY’s management appears well-positioned to manage expectations effectively.