It’s been a difficult year for Canadian company Constellation Software (TSE:CSU). But RBC Capital Markets (RY) is keeping the faith.
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CSU stock is down 25% this year and is having one of its worst annual performances ever. Investors have grown worried that artificial intelligence (AI) will disrupt the Toronto-based company’s business model of acquiring and managing vertical market software (VMS) businesses.
The stock has also taken a hit on news that company founder and CEO Mark Leonard stepped down suddenly and without warning due to unspecified health issues. Leonard remains chair of Constellation Software’s board of directors but is no longer involved in daily operations.
RBC’s Bullish Call on CSU Stock
Despite these difficulties, Paul Treiber, a top five-star rated analyst with a 60% success rate, reiterated a Buy rating on CSU stock, and raised his price target on the shares from $3,999.28 to $4,009.65. The new price target is 20% higher than where Constellation Software’s stock currently trades.
Treiber, and other analysts, say that concerns about AI and its impact on Constellation Software’s business are overblown. As far as Mark Leonard’s departure is concerned, the Canadian company has enough bench strength among competent managers to carry on and execute a proven business strategy.
Is CSU Stock a Buy?
The stock of Constellation Software has a consensus Strong Buy rating among seven Wall Street analysts. That rating is based on six Buy and one Hold recommendations issued in the last three months. The average CSU price target of $4,997.14 implies 50.52% upside from current levels.
