Brean Capital says positive demand environment would enable Manhattan Associates, Inc. (NASDAQ: MANH) to deliver yet another solid quarter when it reports its third quarter results on October 18.
The brokerage expects third quarter EPS of $0.46 on revenue of $154.5 million. The consensus estimate calls for EPS of $0.46 and revenue of $156.15 million.
“Checks with industry contacts continue to indicate the demand environment remains positive, especially in regards to large WMS (warehouse management system) opportunities,” analyst Yun Kim wrote in a note.
In addition, Brean’s checks into the company's largest WMS competitor indicate continued positive demand trends for both vendors and also favorable pricing environment.
Kim noted that Manhattan Associates is benefiting from positive spending trends in the retail vertical, helped by omni-channel initiatives that in turn drive a healthy warehouse management systems (WMS) replacement cycle.
That said, the analyst said the second quarter softness in its professional services business could continue in third quarter as certain customers delay their upgrade activity. However, Kim expects the professional services business to return back to normal growth rate starting in the fourth quarter, with new upgrade opportunities replacing existing ones that were delayed by customers.
“Given our belief that much of MANH’s valuation premium is driven by its consistency in its execution, we expect the stock to move higher as it continues to put up steady top-line growth while showing improving margin leverage,” Kim added.
Kim maintained Buy rating and $75 target price on shares, which closed Wednesday at $56.45.
Latest Ratings for MANH
|Apr 2016||William Blair||Downgrades||Outperform||Market Perform|
|Feb 2016||Avondale Partners||Initiates Coverage on||Market Perform|
|Jan 2016||Brean Capital||Initiates Coverage on||Buy|
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