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On Wednesday, CIBC (TSX:CM) analysts began coverage on D2L Inc. (DTOL:CN), a prominent learning management system (LMS) provider. The firm issued an Outperformer rating and set a price target of C$20.00 for the company’s shares. CIBC’s coverage comes at a time when D2L holds a significant 19% share of the North American LMS market, positioning it as the second-largest provider in the region.
The analysts highlighted D2L’s strategic shift towards enhancing profitability and expanding its market share within the corporate and international sectors. This pivot follows the company’s successful establishment in the North American higher education market. CIBC predicts that D2L could achieve margins exceeding 30% over the long term as the company scales its operations.
D2L’s current market valuation is at 1.9 times forward enterprise value to sales (EV/S), which is noted to be a full times discount compared to its small-cap SaaS peers. This discrepancy is attributed to recent market contractions based on demand concerns, which CIBC analysts believe are exaggerated.
The firm’s valuation of D2L at 3.0 times EV/S mirrors the average for small-cap SaaS companies and is consistent with D2L’s trading levels in early 2025, before the company was impacted by negative macroeconomic news. CIBC’s endorsement suggests a strong confidence in D2L’s potential for growth and profitability in the evolving educational technology market.
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