SPS Commerce stock reaffirmed at Buy by Needham after Investor Day

Investing.com - Needham maintained its Buy rating and $160.00 price target on SPS Commerce (NASDAQ:SPSC) following the company’s second-ever Investor Day. Currently trading near its 52-week low of $102.05, InvestingPro analysis suggests the stock is undervalued, with 5 analysts recently revising earnings estimates upward.

The firm noted that SPS Commerce outlined both short-term and long-term growth drivers during the event, with medium-term growth expected to shift toward average revenue per user (ARPU) increases rather than new customer acquisition.

ARPU growth is anticipated to come from deeper retailer connection penetration, additional document requirements, and increasing cross-sell opportunities, according to Needham’s analysis.

For long-term expansion, SPS Commerce presented an extensive set of supply chain workflows that it "only scratches the surface on today" which will serve as the foundation for its platform expansion goals. The company also highlighted growth potential in upmarket segments and European markets.

Needham observed that while SPS Commerce is implementing AI agents to improve productivity and reduce customer support costs, these AI capabilities are not expected to be monetized separately, and some investors expressed disappointment about limited discussion of the company’s Revenue Recovery category.

In other recent news, SPS Commerce reported its second-quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $1.00, compared to the forecast of $0.91. The company also reported revenue of $187.4 million, slightly exceeding the expected $185.82 million. Despite these positive results, several analyst firms have adjusted their outlook on the company. DA Davidson downgraded SPS Commerce from Buy to Neutral, citing a revised growth outlook, and lowered its price target to $125.00. Similarly, Loop Capital downgraded the stock to Hold, reducing its price target to $120.00. Meanwhile, Stifel lowered its price target to $150, maintaining a Buy rating, following insights from the company’s analyst day. Needham also reduced its price target to $160.00, maintaining a Buy rating, amid tariff concerns. These developments reflect a cautious stance among analysts despite the company’s recent financial performance.

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