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On Thursday, Loop Capital analysts downgraded Manhattan Associates, Inc. (NASDAQ:MANH) stock from Buy to Hold, also reducing their price target from a previously higher figure to $170. The downgrade comes as the stock has declined over 43% in the past six months, though InvestingPro data shows the company maintains a "GREAT" financial health score. The downgrade was attributed to concerns over macroeconomic uncertainty leading customers to postpone their Warehouse Management System (WMS) on-premises migrations, which are expected to impact the company's business for the remainder of the year.
According to the analysts at Loop Capital, these migrations represented about one-third of Manhattan Associates' business in 2024 and were anticipated to play a larger role in the company's growth strategy for 2025. While the company achieved 12.23% revenue growth in the last twelve months, the delays in customer migrations due to the uncertain economic environment are seen as a significant factor that could pressure the company's performance. InvestingPro analysis indicates the stock is currently trading above its Fair Value, with high earnings and EBITDA multiples suggesting elevated valuations.
The analysts noted that the current revenue guidance and consensus estimates for Manhattan Associates might not fully account for the risks posed by the postponement of WMS migrations. Eight analysts have recently revised their earnings expectations downward, according to InvestingPro, which offers 12+ additional exclusive insights about MANH's financial health and market position in its comprehensive Pro Research Report. They suggest that the company's business could face headwinds throughout the rest of the year.
Despite the downgrade, Loop Capital acknowledges the strength of Manhattan Associates as a well-managed company with a favorable position in the market. They recognize the potential longer-term opportunities for the company, such as the WMS replacement cycle and expansion into adjacent supply chain areas.
The report concludes with a cautionary note that the current stock price of Manhattan Associates, even after a recent sell-off, may not fully incorporate the potential decrease in conversion business. This assessment led the analysts to adjust their rating to Hold, indicating a neutral stance on the stock's short-term prospects.
In other recent news, Manhattan Associates has been the focus of several analyst reports and company announcements. The company reported fourth-quarter results that fell short of expectations, coinciding with the announcement of CEO Eddie Capel's retirement, effective February 2025. Capel will be succeeded by Eric Clark, formerly of NTT Data North America, after a two-year succession planning process. Piper Sandler adjusted their price target for Manhattan Associates to $200, maintaining an Overweight rating, while Citi lowered their target to $184 with a Neutral rating, citing challenges in the professional services sector.
Meanwhile, Truist Securities maintained a Buy rating with a $285 price target, expressing confidence in the company's cloud innovation cycle and the potential for sustained growth in Software (ETR:SOWGn) as a Service (SaaS) revenue. William Blair upgraded the stock to Outperform, highlighting the long-term prospects and resilience of the company's cloud pipeline and subscription bookings. Raymond (NSE:RYMD) James reiterated an Outperform rating with a $270 price target, emphasizing Capel's significant contributions to the company's growth and innovation.
These developments reflect a mix of optimism and caution among analysts regarding Manhattan Associates' future, particularly in light of the CEO transition and the company's strategic direction. Despite challenges in the professional services segment, some analysts remain positive about the company's long-term opportunities, driven by its strong market position and innovative strategies.
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