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On Tuesday, Redburn-Atlantic revised its stance on Manhattan Associates, Inc. (NASDAQ: NASDAQ:MANH), downgrading the stock from a Buy to a Neutral rating and reducing the price target to $200 from the previous $270. The adjustment reflects concerns over the company’s significant reliance on discretionary professional services. According to InvestingPro data, eight analysts have recently revised their earnings estimates downward, while the stock trades at a P/E ratio of 54.8x, suggesting relatively high valuation levels.
According to the analysis by Redburn-Atlantic, Manhattan Associates is projected to derive approximately 46% of its revenue in 2025 from discretionary professional services. Despite these concerns, InvestingPro analysis shows the company maintains strong financial health with revenue growth of 9.2% and an excellent overall financial health score. Redburn-Atlantic highlighted three main factors expected to maintain pressure on the company’s Services segment. The first is that Manhattan Associates’ cloud product may require less support compared to on-premise solutions, thereby reducing the need for professional services.
The second factor involves system integrators who have become more accustomed to Manhattan Associates’ offerings. As these system integrators offer more competitive rates, the demand for the company’s higher-priced professional services may decline. Lastly, Redburn-Atlantic anticipates that customers will continue to be cautious with their discretionary spending due to ongoing macroeconomic uncertainties.
The firm has consequently lowered its earnings estimates for Manhattan Associates. The downgrade to a Neutral rating from a Buy reflects a more conservative outlook on the company’s future earnings potential in light of the expected industry challenges.
In other recent news, Manhattan Associates has been the focus of several analyst upgrades following its Momentum conference in Las Vegas. Truist Securities raised its price target for the company to $210, maintaining a Buy rating, citing sustained growth in cloud subscription revenue and strategic collaborations with Google (NASDAQ:GOOGL) and Shopify (NASDAQ:SHOP). DA Davidson also increased its price target to $225, emphasizing the company’s commitment to product integration and quick return on investment for clients. Baird analysts lifted their target to $212, highlighting the company’s advancements in AI and cloud adoption. Additionally, Manhattan Associates announced the introduction of Agentic AI capabilities within its Manhattan Active solutions, aimed at enhancing supply chain operations with intelligent digital agents. The company also launched the Manhattan Agent Foundry, a platform for building custom AI agents, which is expected to be available by Fall 2025. These developments reflect a positive outlook on Manhattan Associates’ strategic direction and market position, as noted by various analyst firms.
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