Rating reaffirmed as Buy for Manhattan Associates stock despite FX-driven noise

On Wednesday, Truist Securities reaffirmed its Buy rating on Manhattan Associates, Inc. (NASDAQ:MANH) with a steady price target of $310.00. According to InvestingPro data, the company maintains a "GREAT" financial health score, with 7 analysts recently revising their earnings expectations upward. The stock has shown impressive momentum, delivering a 25% return over the past six months. The endorsement comes as the firm anticipates the company to showcase robust Recurring Purchase Obligations (RPO) and cloud bookings for the fourth quarter of 2024, despite facing foreign exchange headwinds due to the intra-quarter strengthening of the dollar.

Terry Tillman of Truist Securities provided insight into the expected performance, noting that when adjusted for foreign exchange challenges, Manhattan Associates is likely to see a significant impact on quarter-over-quarter growth in RPO. The analyst emphasized that investors should look past the temporary noise of currency fluctuations and focus on the company's resilient demand dynamics, which are supported by an expanding set of cloud subscription revenue growth drivers.

According to Tillman, Manhattan Associates has been experiencing strong growth in cloud subscription revenues, which has been compensating for the slower services revenue observed in recent quarters. This balance is seen as a positive indicator for the company's financial health and future prospects. InvestingPro data confirms this strength, showing a robust revenue growth of 15.3% in the last twelve months, though current valuations suggest the stock may be trading above its Fair Value.

Truist Securities stands by its Buy rating and $310 price target for Manhattan Associates, highlighting the company as one of the top stories in their coverage universe in terms of combined cloud subscription revenue growth and operational margin/free cash flow.

With the company's next earnings report scheduled for January 28, investors can access comprehensive analysis and 14 additional key insights through InvestingPro's detailed research reports, which provide deep-dive analysis of Manhattan Associates' financial performance and market position. This reiteration of confidence underscores the firm's outlook on Manhattan Associates' ability to navigate the current market conditions and continue its growth trajectory.

In other recent news, Manhattan Associates Inc. has reported an impressive Q3 performance, with a 12% increase in total revenue to $267 million and a 29% rise in adjusted earnings per share to $1.35. The company's cloud subscription revenue witnessed a significant boost of 33%, while the remaining performance obligation (RPO) grew by 27% to approximately $1.7 billion. This growth is primarily due to the increased demand for Manhattan's innovative cloud services, particularly the new Manhattan Active Supply Chain Planning solution.

The company also announced the successful deployment of Manhattan Active Maven, an AI-powered chatbot, by the Army & Air Force Exchange Service (Exchange). The chatbot is designed to streamline customer service by handling various inquiries, potentially increasing customer satisfaction and the net promoter score (NPS).

Piper Sandler recently initiated coverage on Manhattan Associates, giving the stock an Overweight rating. The firm highlighted Manhattan Associates' effective management of complex environments in the supply chain sector and indicated a potential migration opportunity exceeding $3 billion.

Looking ahead, Manhattan Associates has adjusted its 2024 revenue guidance to a range of $1.039 billion to $1.041 billion, with an increased operating margin midpoint to 34%. Preliminary targets for 2025 include total revenue of $1.13 billion to $1.14 billion and a cloud revenue growth of 23%.

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