SPS Commerce (SPSC) shares plunged 20.96% in intraday trading on Thursday, as investors reacted to a wave of analyst downgrades and price target reductions. The sharp decline came despite the company reporting what some analysts described as "reasonably good" Q2 results.

Leading the bearish sentiment, Loop Capital downgraded SPS Commerce from Buy to Hold and slashed its price target from $175 to $120. This dramatic reduction implied limited upside potential and significantly contributed to the stock's tumble. Other prominent financial institutions followed suit, with Needham cutting its price target from $210 to $160, Stifel lowering its target from $175 to $165, and Baird reducing its target from $159 to $145. Additionally, DA Davidson assumed coverage of the stock with a Neutral rating, down from the previous Buy rating.

The collective actions by analysts suggest a shift in market expectations for SPS Commerce, despite the company's recent financial performance. In its Q2 results, SPS Commerce reported non-GAAP diluted earnings of $1 per share, up from $0.80 a year earlier and beating analysts' expectations of $0.91. Revenue also rose to $187.4 million from $153.6 million a year earlier, slightly above the anticipated $185.8 million. Furthermore, the company raised its full-year 2025 guidance, projecting adjusted EPS of $3.99 to $4.04 on revenue of $759 million to $763 million. However, these positive results were overshadowed by the analysts' more cautious outlook on the stock's future performance, leading to the significant sell-off in Thursday's trading session.