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Investing.com - DA Davidson downgraded SPS Commerce (NASDAQ:SPSC) from Buy to Neutral on Thursday, while lowering its price target to $125.00 from $175.00. According to InvestingPro data, the stock currently trades at a P/E ratio of 64.2x, with 8 analysts recently revising their earnings expectations downward.
The rating change came as analyst William A. Jellison assumed coverage of the company following updates to SPS Commerce’s target model, which now projects high single-digit organic year-over-year growth beyond 2025, down from the previous target of 15% or higher including acquisitions. The company has maintained strong historical performance, with InvestingPro showing a 5-year revenue CAGR of 18%.
The new price target of $125 represents a multiple of 22 times the company’s projected 2026 free cash flow, reflecting the adjusted growth expectations compared to DA Davidson’s prior estimate of 15% year-over-year growth in 2026 and consensus estimates of 13%.
Despite the downgrade, SPS Commerce reported second-quarter 2025 results that exceeded expectations on both revenue and earnings, which the company cited as providing increased confidence in its full-year guidance.
The updated target model also calls for annual EBITDA margin expansion of two percentage points, with the company incorporating the second-quarter outperformance into its full-year outlook.
In other recent news, SPS Commerce reported its second-quarter 2025 earnings, which exceeded expectations. The company’s earnings per share came in at $1.00, surpassing the forecast of $0.91, while revenue reached $187.4 million, slightly above the anticipated $185.82 million. Despite these positive results, revenue was on the lower end of the company’s historical range. Needham maintained a Buy rating on SPS Commerce but lowered its price target from $210.00 to $160.00 due to tariff concerns. Meanwhile, Loop Capital downgraded the stock from Buy to Hold, reducing its price target from $175.00 to $120.00, citing growth concerns. Both firms acknowledged that SPS Commerce’s earnings and revenue exceeded their estimates and the company’s guidance. These developments highlight the mixed sentiment among analysts regarding the company’s future prospects.
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