CIBC Capital Markets raised its price target on six Canadian software and services companies, and lowered its target on one, ahead of earnings for the group.

"Calendar Q3 encompasses the seasonally slower months for the majority of our coverage, with consensus forecasting 8% Y/Y EBITDA growth," analyst Stephanie Price said in a note to clients.

"At the beginning of the year, many companies highlighted an expectation for a back-half weighted year," Price said. "As we approach the end of calendar 2024, we have yet to see a material improvement in the demand environment."

"At this point, the weaker environment appears mostly baked in, with a number of our SaaS names reducing F2024 guidance with Q2 results," the analyst said.

"Across our coverage, we are broadly in line with Street estimates for Q3 and will be looking for commentary on the F2025 outlook with results."

Price raised her price target on Converge Technology Solutions Corp. (CTS.TO) to $5 from $4.50 (Neutral), Descartes Systems Group Inc. (DSG.TO, DSGX) to US$116 from US$108 (Outperformer), Docebo Inc. (DCBO.TO, DCBO) to US$55 from US$52 (Outperformer), and Kinaxis Inc. (KXS.TO) to $175 from $152 (Neutral).

The analyst increased her target on Softchoice Corp. (SFTC.TO) to $22 from $19.50 (Neutral) and Thomson Reuters Corp. (TRI.TO, TRI) to US$164 from $156 (Neutral), and lower her target on TELUS International (CDA) Inc. (TIXT.TO, TIXT) to US$4.50 from US$5 (Neutral).

Price said she continues to prefer the defensive names in this environment, with CGI Inc. (GIB-A.TO, GIB), Descartes and Constellation Software Inc. (CSU.TO) her top picks.

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)

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