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Investing.com - Loop Capital downgraded SPS Commerce (NASDAQ:SPSC) from Buy to Hold on Thursday, while significantly reducing its price target to $120.00 from $175.00. According to InvestingPro data, this represents the lower end of analyst targets, which range from $120 to $210, with the stock currently trading at a P/E ratio of 64.
The downgrade comes despite SPS Commerce’s second-quarter 2025 results exceeding analyst expectations, with revenue, EPS, and Adjusted EBITDA all surpassing Loop Capital’s estimates and the high end of company guidance. The company, currently valued at $5.3 billion, has maintained strong revenue growth of 19.46% over the last twelve months.
Loop Capital cited fading expectations for the second half of 2025 and management’s more cautious outlook for 2026 as key factors behind the rating change, noting these projections fell "meaningfully short" of both their estimates and Street consensus.
The revised guidance reflects elongated sales cycles with new SMB customers and upsells, which management attributes to increased market uncertainty surrounding tariffs and consumer spending.
While Loop Capital acknowledged management’s focus on pivoting to margin expansion in response to growth headwinds, the firm expects the stock to "trade sideways for some time" until there is a clear inflection point in demand.
In other recent news, SPS Commerce Inc. reported its financial results for the second quarter of 2025, exceeding analysts’ expectations. The company achieved earnings per share of $1.00, which was higher than the projected $0.91. Revenue also surpassed forecasts, reaching $187.4 million compared to the anticipated $185.82 million. These results marked a 9.89% earnings surprise and a 0.85% revenue surprise, showcasing the company’s robust financial performance. Despite these positive financial metrics, the company’s stock experienced a slight decline in after-hours trading. The stock closed at $140.1, reflecting a decrease of 0.39%. Investors and analysts are likely to keep a close eye on future developments following these results.
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