Key Takeaways:
- Supply Chain Backbone: SPS Commerce has delivered 100 consecutive quarters of revenue growth, serving retailers and suppliers across an $11 billion addressable market.
- Price Projection: Based on current execution, SPSC stock could reach $74.58 by December 2028.
- Potential Gains: This target implies a total return of 20.4% from the current price of $61.92.
- Annual Return: Investors could see roughly 6.7% growth annually over the next 2.9 years.
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SPS Commerce (SPSC) just reported its 100th consecutive quarter of revenue growth. Yet the stock sits roughly 70% below its all-time high, punished by slowing growth, macro headwinds, and uncertainty around its Revenue Recovery business.
- Full-year 2025 revenue grew 18% to $751.5 million.
- For 2026, management guided revenue growth to approximately 7% growth — a meaningful step down – in the range of $798.5 million to $806.9 million.
- That deceleration is the core issue investors are wrestling with right now.
- The company is dealing with customers scrutinizing spending, some down-sizing their SPS connections due to shifting retail relationships, and complications from Amazon policy changes that dented Revenue Recovery take rates.
- These headwinds are real, but management expects to lap most of them by the second half of 2026.
SPS operates a network that retailers and suppliers increasingly depend on. Its new AI-powered product, MAX, is generating early excitement.
And the company continues expanding ARPU through cross-selling Analytics and Revenue Recovery to its existing fulfillment base.
See analysts’ full growth forecasts and estimates for SPSC stock (It’s free) >>>
What the Model Says for SPS Commerce Stock
SPSC’s model is built around network effects. Once retailers mandate SPS-based EDI compliance, their entire supplier base must connect.
The near-term pain is mostly cyclical. Suppliers are pulling back on discretionary connections during a tough trade environment.
But the structural demand for supply chain automation isn’t going away — if anything, tariff volatility makes efficient trading partner management more valuable, not less.
Management also sees a clear path to margin expansion, targeting roughly 2 percentage points of EBITDA margin improvement annually.
Gross margin is already benefiting from years of infrastructure investment that no longer requires the same level of headcount to maintain.
Using a forecast of 7.5% annual revenue growth and 32.0% net income margins, the model projects SPSC reaching $74.58 by December 2028 — a 20.4% total return, or 6.7% annually.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for SPSC stock:
1. Revenue Growth: 7.5%
SPS is expected to achieve approximately 7% revenue growth in 2026. Historically, the company has grown revenues at 17–20% annually.
The slowdown reflects near-term macro pressure, not structural deterioration.
As headwinds from customer down-sells and Amazon policy changes fade in the back half of 2026, growth should gradually reaccelerate.
Management expects at least high-single-digit growth beyond 2026 without acquisitions.
2. Operating margins: 32.0%
The company has been systematically improving gross margins by extracting efficiency from past infrastructure investments.
With R&D spend staying flat as a percentage of revenue and G&A being brought toward a 10–15% target, the margin expansion story will show improvement.
The 23.7% net income margin assumption reflects a realistic, steady-state improvement trajectory.
3. Exit P/E Multiple: 13.3x
This is the most conservative assumption in the model — and intentionally so. SPSC’s NTM P/E has averaged 28x over the past year and 53x over the past five years.
At 13.3x, the model prices in meaningful multiple compression, accounting for the deceleration in growth and uncertainty around Revenue Recovery’s trajectory.
If sentiment improves and growth reaccelerates, the upside case becomes significantly more compelling.
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What Happens If Things Go Better or Worse?
Here’s how SPSC might perform under different scenarios through December 2030:
- Low Case: 6.4% revenue growth and 22.1% net income margins produce a 7.9% total return (1.6% annually).
- Mid Case: 7.1% growth and 23.7% margins deliver a 36.2% total return (6.5% annually).
- High Case: 7.8% growth and 25.0% margins push returns to 66.3% total (11.0% annually).
See what analysts think about SPSC stock right now (Free with TIKR) >>>
The wide range reflects how much it depends on Revenue Recovery stabilizing, enablement campaigns converting in the back half of 2026, and MAX gaining commercial traction as a monetizable product over time.
How Much Upside Does SPS Commerce Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
