The Minneapolis-based company is a provider of cloud-based supply chain management solutions.
The lower price target comes after the company posted better-than-expected 2015 fourth quarter results yesterday, but provided a disappointing annual revenue outlook for the first time as a public company, JMP Securities noted.
SPS Commerce reported earnings of 27 cents per diluted share, topping analysts' expectations for earnings of 21 cents per share. Revenue for the quarter rose by 20% to $42.3 million, higher than analysts' estimates of $42.18 million.
For the full year, the company is expecting earnings between 92 cents to 95 cents per diluted share, on revenue in the range of $191.5 million to $193 million.
The company blamed the disappointing guidance on a shortfall in sales hiring, fewer productive sales representatives and netting out the expected contribution from its acquisition of ToolBox Solutions, the firm added.
"Software investors have had too many bad experiences in the past few years where companies initially blamed sales hiring only to later acknowledge more fundamental issues," JMP Securities said in an analyst note.
Shares of SPS Commerce plunged by 20.25% to $49.40 on heavy trading volume on Thursday.
About 1.11 million of the company's shares traded hands today, well above its average volume of 106,629 shares per day.
Separately, TheStreet Ratings Team has a "hold" rating with a score of C+ on the stock.
The primary factors that have impacted the rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.
The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and robust revenue growth.
As a counter to these strengths, the team finds that the company's return on equity has been disappointing.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: SPSC