Rosenblatt raises Pegasystems stock target to $115, maintains buy

On Tuesday, Rosenblatt Securities adjusted its financial outlook for Pegasystems (NASDAQ:PEGA), a notable player in the software industry. Analyst Blair Abernathy at Rosenblatt increased the price target on Pegasystems shares to $115 from the previous target of $95, while reiterating a Buy rating on the stock. The company, now valued at approximately $9 billion, has demonstrated remarkable performance with a 110% return over the past year. InvestingPro analysis reveals that PEGA has been one of the market’s stronger performers, though it currently trades above its calculated Fair Value. The revision comes ahead of Pegasystems’ anticipated fourth-quarter earnings report for the period ending December 31, 2024, which is scheduled to be released on Wednesday, February 12, 2025, after the market closes.

Abernathy’s optimism is based on expectations for the company’s performance in the fourth quarter, despite potential foreign exchange headwinds and a forecasted 21% growth in Pega Cloud revenue for the fiscal year 2024. The analyst highlights that the process automation spending environment for Pegasystems has remained relatively stable in North America, accounting for approximately 55% of the company’s revenue.

The stable financial environment is attributed to ongoing Digital Transformation programs among Pegasystems’ existing customers, many of whom have yet to fully leverage the company’s offerings. Additionally, the transition to Pega Cloud is expected to contribute to the company’s growth, as evidenced by a 30% year-over-year increase in Pega Cloud Annual Contract Value (ACV) during the third quarter, despite a more challenging comparison in the fourth quarter.

The anticipated growth is also supported by workflow automation initiatives, which are gaining momentum through the increasing adoption of Pega GenAI Blueprint. As the company moves forward, Rosenblatt’s valuation now extends to the fiscal year 2026, underpinning the decision to raise the price target.

Investors and market watchers are looking forward to the company’s earnings call, which will take place on the morning of Thursday, February 13, 2025, at 8 a.m. ET. During this call, Pegasystems is expected to provide further insights into its fourth-quarter performance and expectations for the coming year. With analyst targets ranging from $78 to $125 and an overall "Good" financial health score according to InvestingPro, PEGA remains a closely watched stock in the software sector. Subscribers can access the comprehensive Pro Research Report, which provides detailed analysis of PEGA’s market position and growth trajectory among 1,400+ top US stocks.

In other recent news, Pegasystems Inc . has been making significant strides in its operations and strategic planning. The company recently established a 2025 executive incentive plan, which is contingent on meeting financial and strategic targets. This plan is designed to align executive compensation with corporate performance and shareholder interests.

In addition, Pegasystems has been chosen as part of Team Serco (LON:SRP) to modernize the United Kingdom’s Armed Forces Recruiting Service. This partnership aims to streamline the recruitment process and improve the overall candidate experience.

Adding to the company’s recent developments, Rohit Ghai, a seasoned leader in digital transformation, has been appointed to Pegasystems’ board of directors. Ghai’s extensive experience in the enterprise software industry is expected to bring valuable insights to the company.

Furthermore, KeyBanc has given Pegasystems an Overweight rating, recognizing the company’s effective strategies in growing its customer base, its introduction of the GenAI Blueprint product, and an improved approach to acquiring new clients. These recent developments highlight Pegasystems’ focus on performance-driven rewards, strategic partnerships, board enhancements, and positive analyst coverage.

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