SPS Commerce's (SPSC) near-term growth outlook remains constrained as the macro environment continues to negatively impact its retail end-market, Morgan Stanley said in a Tuesday note.
The analysts said that the company's total addressable market is bigger than market estimates, validated by the better-than-expected organic net customer adds of 350 and 600 over the past two quarters.
Morgan Stanley noted, however, that tariffs and the challenging macro environment for the company's key end-markets have led to spending scrutiny, resulting in suppliers down-selling through fewer retailer connections and lower document volumes through monthly contracts.
The analysts said that the company's near-term growth will be constrained to the low end of its high-single-digit target.
"With a lack of positive catalysts to turn growth around in the near-term, the stock likely remains range-bound," they said.
Morgan Stanley downgraded the stock's rating to equal-weight from overweight, and lowered its price target to $100 from $140.
Price: 80.66, Change: -0.99, Percent Change: -1.21
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