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On Friday, SPS Commerce (NASDAQ:SPSC), a provider of cloud-based supply chain management solutions, was reiterated at Buy with a $230.00 price target at Needham. This affirmation comes following SPS Commerce's announcement of its acquisition of Carbon6, an Amazon (NASDAQ:AMZN) marketplace-focused company, for $210 million.
The acquisition, which was announced after the market closed on Thursday, aims to enhance SPS Commerce's invoice deduction management platform. This platform recently expanded through the 2024 acquisition of SupplyPike. Needham views the transaction as financially sensible, with Carbon6 valued at approximately 4.8 times its projected fiscal year 2025 revenues. Carbon6 is recognized for its rapid growth rate and presents a substantial greenfield sales opportunity that SPS Commerce can capitalize on using its larger sales force.
"We like the acquisition more for the synergetic product elements since, like SupplyPike, customers tend to use the invoice data within the core SPS fulfillment solution creating an even more compelling combined solution," the analysts at the firm said.
While Carbon6 currently has a lower profitability profile, Needham anticipates that cost synergies will emerge in fiscal year 2026, aligning Carbon6 more closely with SPS Commerce's profitability objectives.
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