Oppenheimer Raises SPS Commerce Price Target On Solid Results, Guidance Beat

SPS Commerce, Inc. SPSC reported delivered solid 4Q results Tuesday and issued above-consensus 2019 guidance. 

The quarter highlighted consistently good execution, with EBIDTA margin expansion and recurring customer adds, and the company also completed the acquisition of CovalentWorks, a leading provider of EDI solutions, according to Oppenheimer.

The Analyst

Oppenheimer’s Koji Ikeda maintained an Outperform on SPS Commerce and raised the price target from $95 to $112.

The Thesis

SPS Commerce reported Q4 total revenue of $65.2 million, representing 12-percent year-on-year growth and beating the consensus forecast by around $1.3 million. The PF EPS came in at 53 cents, 7 cents higher than the consensus.

The company guided to total revenue of $65.8-$66.3 million for Q1, ahead of Street expectations. PF EPS guidance of 50-52 cents and adjusted EBITDA guidance of $15-$15.5 million also came in higher than consensus projections.

SPS Commerce’s total revenue, PF EPS and adjusted  EBITDA guidance for 2019 were announced at $273.7-$275.7 million, $2.03-$2.09 and $62.5-$64 million, respectively. The midpoints of all these projections are higher than consensus estimates, Ikeda said. 

Although the retail macro environment is expected to remain challenging in 2019, SPS Commerce's good execution may continue, enabling the company to more than meet its financial targets for 2020, the analyst said. 

Oppenheimer raised its non-GAAP EPS estimates for 2019 and 2020 from $1.99 to $2.06 and from $2.26 to $2.33, respectively.

Price Action

SPS Commerce shares were rallying 9.47 percent to $103.62 at the time of publication Wednesday. 

Related Links:

Earnings Scheduled For February 12, 2019

Oppenheimer On SPS Commerce: CovalentWorks Acquisition Will Be Accretive