Needham reiterates Buy rating on SPS Commerce stock as SupplyPike expands

Investing.com - Needham has reiterated its Buy rating and $210.00 price target on SPS Commerce (NASDAQ:SPSC), representing a 52% upside from the current price of $138.16, as the company’s SupplyPike solution expands into four new department stores in July. According to InvestingPro data, the company maintains a GOOD financial health score despite recent market pressure.

The expansion marks a significant acceleration in retailer growth for SPS Commerce’s revenue recovery solution, with only one retailer, Kohl’s (NYSE:KSS), officially announced so far. This development represents a notable increase in the velocity of adding new retailers, as SupplyPike had only added four retailers since April 2024. The company has demonstrated strong revenue growth of 19.46% over the last twelve months.

Needham views the accelerated investment positively for the cross-sell opportunity and believes these additions support the firm’s outlook that SPS has multiple avenues to maintain double-digit organic revenue growth in the near term.

The research firm noted that current investor sentiment may not adequately reflect the stable core fulfillment business and potential upside from cross-selling opportunities.

SPS Commerce acquired SupplyPike, a revenue recovery solution for suppliers, and has been expanding its retailer network to enhance cross-selling opportunities across its platform.

In other recent news, SPS Commerce reported its first-quarter 2025 earnings, exceeding analysts’ expectations with an earnings per share of $0.86, slightly above the forecast of $0.85. The company’s revenue also surpassed projections, reaching $181.5 million compared to the anticipated $179.57 million. Needham maintained its Buy rating and set a $210 price target, noting the company’s robust first-quarter results and its resilience in a challenging economic environment. The firm highlighted SPS Commerce’s organic customer additions and approximately 13% organic recurring revenue growth, suggesting potential for sustained growth in the medium term.

Morgan Stanley (NYSE:MS) initiated coverage on SPS Commerce with an Overweight rating and a price target of $180, focusing on the company’s market-leading Electronic Data Interchange capabilities. Similarly, Cantor Fitzgerald also initiated coverage with an Overweight rating and a $170 price target, citing the company’s consistent growth model and expanding international presence. At the company’s 2025 Annual Meeting of Stockholders, shareholders approved executive pay and re-elected all director nominees, including Chad Collins and Razat Gaurav, to the board. KPMG LLP was ratified as the independent auditor for the current fiscal year.

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