Morgan Stanley Initiates Underweight Coverage on Manhattan with $190 PT

Morgan Stanley Initiates Underweight Coverage on Manhattan with $190 PT

Morgan Stanley has initiated coverage on Manhattan Associates (MANH) with an underweight rating and a price target of $190, as reported on July 2, 2025. The brokerage firm's analysts have highlighted several factors that contribute to this cautious stance.

Manhattan Associates is recognized for its top-tier cloud solutions and potential to gain market share within a $12 billion total addressable market. However, the company has faced a decline in cloud bookings recently and has significant exposure to discretionary service work, which could pose a risk to future estimates. Morgan Stanley's recent CIO survey indicated muted growth and increased discounting in IT services spending, suggesting the potential for softer demand.

The firm noted that Manhattan Associates' shares trade at a premium valuation of around 39 times free cash flow, which may already reflect optimistic expectations and underappreciate the risk of downward estimate revisions. Morgan Stanley suggests waiting for a valuation decrease before considering a more positive stance on the stock.

According to the latest earnings call, Manhattan Associates reported better-than-expected top- and bottom-line results for Q1 2025, with a 21% growth in Cloud revenue. The company achieved a 25% year-over-year increase in Remaining Performance Obligations (RPO), reaching approximately $1.9 billion. Manhattan Associates Inc (MANH) was named Google Cloud's Business Applications Partner of the Year for Supply Chain and Logistics, highlighting its innovation and customer success. The company launched a new product, Enterprise Promise and Fulfill, designed to optimize B2B order promising and fulfillment, enhancing customer experiences.

Despite these positive developments, Morgan Stanley's underweight rating reflects concerns about the company's exposure to discretionary services and the potential impact of a weaker macro environment. The brokerage firm advises investors to wait for a valuation decrease before considering a more positive stance on the stock.

References:
[1] https://www.gurufocus.com/news/2973955/manhattan-associates-manh-receives-underweight-rating-from-morgan-stanley-manh-stock-news
[2] https://finance.yahoo.com/news/manhattan-associates-apos-slowing-cloud-153757362.html