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Research Alert: CFRA Cuts Rating On Shares Of Constellation Software Inc. To Hold From Buy
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Research Alert: CFRA Cuts Rating On Shares Of Constellation Software Inc. To Hold From Buy
May 26, 2025 7:05 AM

02:05 PM EDT, 05/13/2025 (MT Newswires) -- CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

We lower our opinion on shares of CSU to Hold from Buy. However, we also increase our target price to CAD5,519 from CAD5,331 based on a P/E of 77x our 2026 GAAP EPS estimate of $51.34. We switch to GAAP EPS to better align with the company's reporting. The multiple is above its three-year average on steady margin expansion and cash flow growth, and reflects our confidence in management's execution ability. However, we see limited upside potential due to a richer valuation. Q1 results were also mixed; both revenue and EPS were below consensus, but cash flow margins remained stable. Operating cash flow and free cash flow were $827M (margin of 31.2%) and $510M (margin of 19.2%), respectively, stable when compared to Mar-Q of the previous year. However, CSU saw weaker revenue growth (+12.8% Y/Y), down from 22.6% in Q1 2024. We project 2025 GAAP EPS of $43.74 and forecast 2026 GAAP EPS of $51.34.

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