SPS Commerce Buys Data Masons for $100M; Shares Up 75% YTD

SPS Commerce on Thursday announced the acquisition of all equity interests in Data Masons for $100 million in cash.

As a result of the acquisition, SPS Commerce (SPSC) expects to add $20 million in revenue and $3 million in adjusted EBITDA for FY21, and $5 million in adjusted EBITDA for FY22.

Data Masons streamline Electronic Data Interchange (EDI) by providing tight integration and compliance management services. SPS Commerce is a cloud-based supply chain management software provider to retailers, suppliers, third-party logistics providers, and partners.

Together, SPS Commerce and Data Masons offer unmatched trading partner and system expertise for customers using Microsoft solutions,” said SPS Commerce CEO Archie Black. “Combined, we have numerous partnerships in the Microsoft community that will extend SPS Commerce’s leadership in this market.”

As part of the deal, Data Masons customers will have access to SPS Commerce’s global retail network, which includes more than 90,000 trading partners in over 80 countries, and expanded capabilities for connecting with international supply chain partners.

SPSC stock has gained 75% year-to-date and is trading at a discount of 8% to its 52-week high. (See SPSC stock analysis on TipRanks)

On Dec. 1, Northland analyst Nehal Chokshi initiated coverage on the stock with a Hold rating. The analyst raised the price target from $80 to $105. Chokshi attributed the PT change to a different valuation method .

The analyst believes SPS has the potential to capture around 64% of the total $5 billion annual revenue recurring opportunity identified by management.

From the rest of the Street, the stock scores a cautiously optimistic Moderate Buy analyst consensus based on 3 Buys and 2 Holds. In light of this year’s sharp rally, the average analyst price target of $100 now implies a more moderate upside potential of 3.1% to current levels.