For now, Benchmark analyst Mark Schappel is staying on the sidelines, reiterating a Hold rating on Pegasystems Inc. (NASDAQ: PEGA). However, PEGA could sway the analyst away from erring on the side of caution should its management change to a more profitability-focused strategy.
“[O]ur rating remains a Hold, though we’d happily upgrade if management began articulating a path to increasing revenue growth and profitability, rather than just revenue growth,” Schappel explains.
While the broader software index is down since Trump’s election due to concerns over upcoming policies, the analyst believes the Trump rally has actually benefited software stocks, especially those with lower relative valuations.
Overall, Schappel contends, “To date, our inputs with company managements, field personnel and potential buyers suggest that business fundamentals are fine, setting the stage for most software vendors to report relatively good December prints, in our view.”
Mark Schappel is a five-star rated analyst according to TipRanks financial accountability engine, where he has a success rate of 68%, an average return of 17.0%, and a ranking of #217 out of 4,291 analysts.
TipRanks analytics exhibit PEGA as a Buy. Based on 5 analysts polled by TipRanks in the last 3 months, 3 rate a Buy on PEGA stock, while 2 maintain a Hold. The 12-month average price target stands at $38.00, marking a nearly 6% upside from where the shares last closed.