CVO: AI Demand And Cost Discipline Will Drive Shares Higher

Analysts have trimmed their price targets on Coveo Solutions, with the average moving lower in line with reduced fair value estimates to roughly C$13 from about C$15. They cite a slightly higher discount rate and more conservative profitability assumptions, despite firmer revenue growth expectations.

Analyst Commentary

Bullish analysts acknowledge the recent recalibration in targets but continue to frame Coveo as a growth story with attractive upside potential relative to current trading levels. They argue that even reduced price objectives still imply a meaningful premium to the market price, reflecting confidence in the company’s ability to execute on its product roadmap and expand margins over time.

Supportive research notes emphasize that the latest valuation resets are driven more by changes in discount rates and risk assumptions than by any deterioration in the underlying demand backdrop. Expectations for solid top line growth, supported by a growing customer base and higher adoption of AI driven capabilities, underpin the view that Coveo can sustain a favorable revenue trajectory.

Some bullish analysts also highlight that the company’s focus on disciplined cost management provides a clearer path to profitability, which could warrant multiple expansion as execution milestones are met. They see room for positive estimate revisions if Coveo continues to convert its pipeline, deepen enterprise relationships, and demonstrate operating leverage in coming quarters.

Bullish Takeaways

• Even after lower price targets, bullish analysts see material upside from current levels. They indicate that Coveo still trades at a discount to perceived intrinsic value.
• Resilient revenue growth expectations, supported by demand for AI powered search and recommendations, are viewed as a key catalyst for sustaining a premium growth multiple.
• Improving operating efficiency and a clearer line of sight to profitability are seen as drivers of potential re rating as the company delivers on cost discipline and margin expansion.
• Continued product innovation and deeper penetration within existing enterprise customers are expected to support durable growth. This reinforces the long term bullish stance on the shares.

What's in the News

• Coveo announced Retrieval Augmented Generation as a Service for AWS agentic AI services via a Coveo hosted MCP Server, aiming to improve precision, security, and scalability for enterprise generative AI workloads (Key Developments).
• The company introduced new Agentforce capabilities, including custom context pass through and broader compatibility, to deliver more precise support answers and enable GenAI powered case resolution and content generation (Key Developments).
• Coveo revised its guidance for the third quarter of fiscal 2026, projecting revenue of 37.1 million dollars to 37.6 million dollars, and for full year 2026, expecting revenue between 147.5 million dollars and 148.5 million dollars (Key Developments).
• The company completed a share repurchase tranche, buying back 953,900 shares, or approximately 0.99 percent of shares outstanding, for 6.16 million Canadian dollars under its previously announced buyback program (Key Developments).
• Chief Financial Officer Brandon Nussey will step down between December 9, 2025 and February 2, 2026. Senior Vice President of Finance Karine Hamel has been appointed Interim CFO while the company conducts an internal and external search for a permanent successor (Key Developments).

Valuation Changes

• Fair Value Estimate has fallen moderately to approximately CA$13.0 from around CA$15.0, reflecting more conservative assumptions.
• Discount Rate has risen slightly to about 7.52 percent from roughly 7.47 percent, indicating a marginally higher perceived risk profile.
• Revenue Growth Forecast has increased modestly to roughly 16.1 percent from about 15.3 percent, signaling improved top line expectations.
• Net Profit Margin Assumption has edged down slightly to around 11.4 percent from roughly 11.6 percent, incorporating more cautious profitability outlooks.
• Future P/E Multiple has declined meaningfully to about 44.1x from roughly 51.7x, pointing to a lower valuation multiple being applied to forward earnings.