Raymond James Upgrade and Strong Q3 Margins Push Descartes Systems Group Into High-Conviction Buy Territory

The Descartes Systems Group Inc. (NASDAQ:DSGX) is one of the best logistics-tech stocks to buy now.

On December 4, Raymond James upgraded Descartes to ‘Outperform’ from ‘Market Perform’ and assigned a price target of $118. The firm highlighted that shares were trading near the bottom of their 10-year EV/EBITDA range, presenting a compelling valuation setup.

Raymond James Upgrade and Strong Q3 Margins Push Descartes Systems Group Into High-Conviction Buy Territory

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They pointed to a rebound in services organic growth, which rose to approximately 7% on a constant currency basis in the latest quarter, while overall organic growth remained around 2% due to persistent softness in hardware and professional services. Despite macroeconomic pressures weighing on transactional revenues, Raymond James noted Descartes’ strong margin profile and efficient cash flow conversion as positioning it well for a recovery in freight volumes.

The analysts cited Descartes’ gross margin of approximately 76%, adjusted EBITDA margin of 46%, and free cash flow conversion rate of 86% as indicators of solid operational execution. The company had reported its Q3 FY26 earnings on the day of the upgrade, posting revenue of $187.7 million, up from $168.3 million a year ago. Net income reached $43.9 million, while adjusted EBITDA rose to $85.5 million. Growth was driven by demand for Global Logistics Network services and strength in subscription revenues.

The Descartes Systems Group Inc. (NASDAQ:DSGX) is a Canadian logistics technology company that provides supply chain management and route optimization solutions to enterprises worldwide.

While we acknowledge the potential of DSGX to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than DSGX and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.