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On Tuesday, William Blair analysts reiterated an Outperform rating for Pegasystems stock (NASDAQ: NASDAQ:PEGA), which currently commands a market capitalization of $8.3 billion. According to InvestingPro data, analysts maintain a positive consensus with a mean rating of 1.79 (1.0 being strongest buy). The reaffirmation follows the company’s annual user conference, PegaWorld, held in Las Vegas, where Pegasystems unveiled several strategic initiatives and updates.
During the event, Pegasystems announced a raise in its guidance for 2025. The company introduced new capabilities for its Blueprint offering, which are anticipated to broaden its addressable market. With an impressive gross profit margin of 75.74% and strong revenue growth of 14.29% over the last twelve months, the company appears well-positioned to execute its strategy. Management also set ambitious targets for achieving sustainable double-digit annual contract value (ACV) growth and $700 million in free cash flow over the next three to five years.
A significant highlight from the conference was Pegasystems’ expansion of its target market. The company’s management indicated that its target now includes over 10,000 companies, a substantial increase from the previous target of 1,000. This expansion is attributed to the growing success of Blueprint, which is enhancing customer understanding of the platform’s return on investment (ROI) and enabling Pegasystems to redeploy sales resources effectively.
Pegasystems aims to capitalize on this expanded market through strategic partnerships and new pricing strategies. The company projects its total addressable market (TAM) to grow from approximately $90 billion in 2025 to over $150 billion by 2029.
The developments at PegaWorld underscore Pegasystems’ commitment to growth and innovation, as the company seeks to solidify its position in an increasingly competitive market.
In other recent news, Pegasystems has made significant updates to its financial outlook and product offerings. At its annual PegaWorld 2025 conference in Las Vegas, the company raised its 2025 revenue guidance by $100 million and increased its earnings per share by $0.84, reflecting strong first-quarter performance. Analysts from JPMorgan and Citi have maintained their positive ratings on Pegasystems, with JPMorgan reiterating an Overweight rating and Citi maintaining a Buy rating. Additionally, Citizens JMP raised its price target for Pegasystems stock to $125, up from $110, while maintaining a Market Outperform rating.
Pegasystems unveiled advancements in its Gen AI Blueprint capabilities, which aim to modernize legacy technology processes efficiently. The company also introduced the Pega Agentic Process Fabric, a new service designed to enhance automation by orchestrating AI agents and systems. These developments are part of Pegasystems’ strategy to capitalize on legacy modernization opportunities and expand its free cash flow.
The company has also outlined plans to double its free cash flow from 2024 to 2028, targeting $700 million under a consistent low-teen annual contract value growth framework. The enhanced Pega Blueprint now facilitates faster legacy system transformation by employing advanced AI to analyze various legacy assets. These initiatives underscore Pegasystems’ commitment to driving enterprise transformation and improving business efficiency through innovative solutions.
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