Manhattan Associates (NASDAQ:MANH) fell 23.4% in pre-market trading on Wednesday after its Q4 2024 earnings report. This was despite the company’s Q4 earnings being strong and beating estimates. The culprit behind the decline was Manhattan Associates’ disappointing FY 2025 guidance.
EPS guidance came in at $4.45 to $4.55 vs. the consensus estimate of $4.91. Moreover, revenue guidance was $1.06 billion to $1.07 billion vs. the consensus estimate of $1.1 billion. The EPS guidance is most likely why investors have decided to punish the stock so much.
This guidance implies slower growth compared to last year, and the projected revenue growth will lead to just 2-3% year-over-year growth.
All that said, GAAP operating margin guidance for 2025 (22.3% to 22.9%) and the restructuring costs (eliminating ~100 positions) is overshadowing the good results here.
Citigroup cut its price target from $306 to $303 a day before the report. The stock already trades with a high valuation of around 83.84 times earnings, so there’s little room for error. This is what amplified the selloff, as investors had a lot of growth and profits baked in.
The stock is now $225.92 pre-market from a previous close of $295. It will likely see further cuts from analysts.
The current consensus price target is $313.
The massive selloff after the weak guidance could open up a buying opportunity, as one could argue that the 23.4% decline could be an overreaction. Excluding the earnings guidance, the company’s performance so far is better than what analysts had expected. If Manhattan Associates manages to beat estimates in FY 2025 and prove analysts wrong, this could lead to a sharp reversal in investor confidence.