Is Kinaxis Stock a Buy in April 2023?

Kinaxis stock has surged in the last while, but is more on the way for this expensive stock? Or should investors watch out?

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Tech stocks have had a hard time over the last year or so, with many falling to 52-week lows, if not lower. However, there is one company that is on the upswing, and that’s Kinaxis (TSX:KXS).

Kinaxis stock is up 21% in the last year, and 16% year to date. Yet, the big question is whether or not this growth will continue. So, is Kinaxis stock a buy in April, 2023?

Why Kinaxis stock?

There are several companies actually doing well in 2023, even some tech stocks. So why Kinaxis stock? Let’s first dive into that question by looking at what Kinaxis stock does. The supply-chain management company offers its software through a subscription. This subscription is typically used by large and even multinational companies around the world.

Some of the biggest names include Ford, Cisco, and Qualcomm, among others. Furthermore, contracts run multiple years, with no customer adding more than 5% to revenue. This diversification has proven beneficial, as Kinaxis could face significant risk by putting too much of its revenue in the hands of one company.

Furthermore, supply-chain management has proven to be an area that needs vast improvement, and companies like Kinaxis can help. The world demands speedy, as well as efficient, delivery. So Kinaxis stock and its software are certainly a beneficial investment for those seeking more growth in the ecommerce, tech, and supply-chain area.

Better than ever

Back in March, Kinaxis stock reported its fourth-quarter 2022 results, and they came in better than anticipated by analysts. The company reported US$98.5 million in revenue, up 44% year over year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) also beat projections, hitting US$21.1 million.

Furthermore, 2023 guidance also went past expectations. With software-as-a-service (SaaS) growth better than ever, the company now believes it can achieve revenue growth of 25% to 27% in 2023. This led to several analysts upgrading the stock to a buy, an outperformer, and higher potential upside.

The consensus price target now sits at $217 as of writing. This would bring the 2023 potential upside to 22%. But what about long term?

A medium-to-long hold?

When it comes to investing, we want to find those stocks that are going to be solid long-term buys. In the case of Kinaxis stock, how does it stack up? Analysts see the two- to seven-year contracts as strong, especially in the medium term while the company continues to benefit from secular tailwinds.

Kinaxis has also started increasing its share of clients representing small and medium businesses as well, providing even more diversification. Whether large or small, there continues to be high demand for quality companies that can achieve stable supply-chain models. Kinaxis stock and its software have proven it’s able to achieve such profitable results, with far more room to grow.

Bottom line

Shares of Kinaxis stock may be up right now, but they are still down from all-time highs. These were achieved during the pandemic, when ecommerce demand surged. Then, a drop followed. That dip in the KXS stock could mean huge gains for investors looking for returns in the next five years at least, but likely even longer.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has positions in Kinaxis. The Motley Fool recommends Kinaxis. The Motley Fool has a disclosure policy.

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