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Manhattan Associates Higher After Large Deals Continue Despite Wall Street Doubts

Manhattan Associates, Inc. MANH 2.33% reported F2Q results indicating continued strong margin leverage with steady top-line figures. Brean Capital’s Yun Kim reiterated a Buy rating on the company, with a price target of $75.

While some investors had concerns around large deal activity slowing heading into the call, Manhattan Associates reported three seven-figure deals in the quarter, analyst Yun Kim noted.

Healthy 2Q Results

Manhattan Associates reported another consistent top-line quarter, with exceptionally strong margin leverage. License revenue came in at $20.6M, in-line with the Street. The company inked three deals valued at more than $1M during the quarter, while signing several six-figure deals, Kim mentioned.

Manhattan Associates continues to achieve strong margin leverage, backed by cost discipline and increasing scale. This drove non-GAAP operating margin to 36.1 percent, versus the Brean estimate of 32.5 percent.

“Overall, much of the business trends at the company remained steady, with product mix and vertical mix remaining largely consistent from prior quarters,” the analyst stated. She added that although Manhattan Associates’ shares already reflect the consistency in sales execution, continued solid, consistent execution and margin expansion could drive valuation multiples higher.

The EPS estimates for FY16 and FY17 have been raised from $1.75 to $1.79 and from $1.96 to $2.01, respectively.

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DateFirmActionFromTo
Apr 2016William BlairDowngradesOutperformMarket Perform
Feb 2016Avondale PartnersInitiates Coverage onMarket Perform
Jan 2016Brean CapitalInitiates Coverage onBuy

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