On Thursday, SPS Commerce (NASDAQ:SPSC) saw its price target increased to $245 from $240 by DA Davidson while maintaining a Buy rating on the stock. The revision comes after the company announced its acquisition of SupplyPike for $206 million, which is approximately 8 times its sales, marking the largest acquisition by dollar value in the company's history.
SupplyPike is known for its Software as a Service (SaaS) solutions that facilitate communication between suppliers and retailers, aiming to resolve and prevent chargebacks. The acquisition is viewed as a strategic move by SPS Commerce to enhance the value of its network of suppliers.
In other recent news, SPS Commerce has made significant strides in its operations. The company recently completed its acquisition of SupplyPike, a strategic move aimed at expanding its product offerings and enhancing its ability to support the intricate nature of retail supply chain operations. This acquisition, valued at $206 million, is expected to contribute approximately $8 million in revenue for the full fiscal year 2024, with an anticipated revenue increase of roughly $3 million for the third quarter of 2024.
The company's recent financial performance has led to adjustments in its stock price targets by multiple analyst firms. DA Davidson increased its price target to $245, maintaining a Buy rating on the stock. Similarly, Baird raised the company's stock price target to $186, maintaining a neutral rating, while Needham increased its price target for SPS Commerce shares to $230, also maintaining a Buy rating.
These adjustments reflect a positive outlook on the company's financial performance, which includes an 18% increase in year-over-year revenue, and an earnings per share (EPS) increase of 16%. SPS Commerce projects its revenue for the third quarter to fall between $157.6 million and $158.6 million, indicating 16% to 17% year-over-year growth. For the full year of 2024, the company anticipates revenue between $624.2 million and $626 million.
InvestingPro Insights
In light of SPS Commerce's recent acquisition and the raised price target by DA Davidson, it's worth considering additional insights from InvestingPro. Analysts have revised their earnings upwards for the upcoming period, indicating a positive sentiment towards the company's financial prospects. Additionally, SPS Commerce is trading near its 52-week high, reflecting strong market confidence.
InvestingPro data shows a robust revenue growth of 18.47% over the last twelve months as of Q2 2024, a clear testament to the company's expanding business. The firm also boasts a solid gross profit margin of 66.07%, underscoring its efficiency in generating earnings relative to its revenue. However, with a P/E ratio of 106.93 and a PEG ratio of 7.1, the stock is trading at a high earnings multiple, suggesting that it may be priced optimistically relative to its earnings growth.
For investors seeking a deeper dive, there are additional InvestingPro Tips available, which provide further analysis on SPS Commerce's financial health and market position. These insights are part of the comprehensive analysis featured on the InvestingPro platform.
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