Global E-Commerce And Cloud Shifts Will Empower Supply Chain Transformation

Key Takeaways

• Unified cloud and supply chain solutions are driving recurring revenue growth, larger customer contracts, and greater resilience across diverse sectors and markets.
  
• Investment in AI and cloud migration increases customer automation, enables upselling, and supports expanding margins and profitable growth.
  
• Intensifying competition, regulatory pressures, shifting customer preferences, and market saturation threaten growth, pricing power, and market relevance for Manhattan Associates.

Catalysts

Develops, sells, deploys, services, and maintains software solutions to manage supply chains, inventory, and omni-channel operations.

• Expanding global e-commerce and the need for advanced supply chain solutions are driving demand for Manhattan Associates’ unified cloud product portfolio, as shown by a 25 percent year-over-year increase in Remaining Performance Obligations and strong net new customer bookings; this supports sustained double-digit revenue growth as more retailers, wholesalers, and logistics providers modernize operations.
  
• Clients face ongoing pressure from increasingly complex, omnichannel fulfillment requirements and last-mile delivery challenges, which makes Manhattan’s best-in-class solutions critical for optimizing inventory, fulfillment, and execution; this complexity supports larger deal sizes, raises the company’s multi-year contract value, and provides a strong foundation for recurring revenue and earnings visibility.
  
• Investment in next-generation capabilities—such as generative AI, Agentic AI, and advanced analytics—enables Manhattan to not only upsell and cross-sell to existing customers but also increase automation and efficiency for clients, driving higher gross margins and supporting margin expansion over the long term.
  
• The continued shift from on-premise to cloud-based SaaS within supply chain management, accelerated by the company’s rapid conversion of legacy customers and new product launches, boosts Manhattan’s recurring revenue mix and operating leverage, fueling profitable growth and greater net margin expansion as cloud scales.
  
• Diversification across a broad global customer base and numerous verticals—including retail, grocery, life sciences, technology, and 3PL—mitigates geographic and sector risk and sets the stage for international expansion, which underpins top-line growth and provides resilience in earnings even in a turbulent macroeconomic environment.

Manhattan Associates Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Manhattan Associates compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Manhattan Associates's revenue will grow by 7.5% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 20.9% today to 22.5% in 3 years time.
• The bullish analysts expect earnings to reach $291.2 million (and earnings per share of $4.8) by about April 2028, up from $218.4 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 68.1x on those 2028 earnings, up from 45.1x today. This future PE is greater than the current PE for the US Software industry at 29.6x.
• Analysts expect the number of shares outstanding to decline by 0.72% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.59%, as per the Simply Wall St company report.

Manhattan Associates Future Earnings Per Share Growth

Risks

• The accelerating customer shift toward open-source and low-cost SaaS solutions threatens Manhattan Associates’ ability to command premium pricing and could make client retention more difficult, potentially leading to slower revenue growth and increased pricing pressure over the long term.
  
• Growing global concerns and tightening regulation around data privacy and digital supply chains may increase compliance costs and introduce complexity, which could slow down deal cycles and negatively impact earnings and margins.
  
• Uncertain geopolitical and macroeconomic conditions could prompt enterprises to become more conservative in their IT and logistics investments, leading to lumpier deal flow, delayed contract timelines, and risks to reliable top-line revenue growth.
  
• The company’s core North American market may approach saturation, and with new customer acquisition slowing as acknowledged in contract ramp timelines and deployment lags, long-term revenue growth could decelerate if expansion into new geographies or verticals proves more challenging than anticipated.
  
• The rapid pace of innovation in supply chain software, especially with well-funded cloud-native startups and vertical-specific in-house platforms from mega retailers, increases competitive threats and the risk of Manhattan Associates’ solutions losing relevance, which could ultimately hurt market share, revenue, and operating margins.

Valuation

• The assumed bullish price target for Manhattan Associates is $270.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Manhattan Associates's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $270.0, and the most bearish reporting a price target of just $170.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $1.3 billion, earnings will come to $291.2 million, and it would be trading on a PE ratio of 68.1x, assuming you use a discount rate of 7.6%.
  
• Given the current share price of $162.25, the bullish analyst price target of $270.0 is 39.9% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.