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On Wednesday, Truist Securities adjusted their stance on Manhattan Associates, Inc. (NASDAQ: NASDAQ:MANH), reducing the price target from $310.00 to $285.00, while retaining a Buy rating on the shares. According to InvestingPro analysis, the stock appears overvalued at current levels, trading at a P/E ratio of 83x and commanding a market capitalization of $18 billion. The adjustment follows the company’s fourth-quarter 2024 performance and the updated outlook for 2025.
Terry Tillman of Truist Securities noted the record quarterly change in Remaining Performance Obligations (RPO) and cloud bookings, which reached $127 million on a constant currency basis. Despite this achievement, the company’s outlook for 2025 was affected by foreign exchange (FX) headwinds and a significant reduction in services revenue guidance due to macroeconomic factors. The company maintains strong fundamentals with a 12.2% revenue growth over the last twelve months.
The fourth quarter of 2024 showcased strong operational leverage and a free cash flow (FCF) margin of approximately 40%, with the exception of professional services (PS) softness. However, the issues impacting the 2025 outlook led to a 25% after-hours decline in the stock price. InvestingPro subscribers can access 13 additional investment tips and a comprehensive Pro Research Report for deeper insights into MANH’s valuation and growth prospects.
Tillman highlighted the opportunity for investors to buy on weakness, as the ongoing strength in cloud bookings, potential for subscription revenue upside, and a reworked discounted cash flow (DCF) analysis still indicate robust long-term compounding cash flow and cloud subscription revenue. The company maintains excellent financial health with a 76% return on equity and an impressive gross profit margin of 54.8%. The new price target of $285 reflects the revised lower revenue estimates.
In other recent news, Manhattan Associates presented a mixed bag of results in its fourth-quarter earnings report. The company reported adjusted earnings per share of $1.17 and a 7.3% YoY revenue increase to $255.8 million, surpassing analyst expectations. However, the company’s fiscal 2025 outlook was less optimistic, with a full-year EPS guidance of $4.45-$4.55, falling short of the $4.61 analyst consensus. Revenue guidance of $1.06-1.07 billion slightly exceeded the $1.04 billion estimate.
Cloud subscription revenue for the quarter saw a significant 26.5% YoY increase to $90.3 million. The company also reported record bookings, with remaining performance obligations (RPO) growing 25% YoY to $1.78 billion. In addition, Manhattan Associates engaged in stock repurchasing, buying back 155,444 shares for $43.5 million during the quarter.
Citi analyst George Kurosawa revised the price target for Manhattan Associates, bringing it down to $244 from the previous $303, while maintaining a Neutral rating on the company’s shares. The adjustment followed the company’s earnings report and a $50 million cut to the calendar year 2025 revenue outlook, influenced by foreign exchange fluctuations and downsizing in the company’s Professional Services segment. These are among the recent developments for Manhattan Associates.
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