Analysts Cheer Pegasystems Q4 Performance Amid Challenging Macro, Guidance Calls For Material Profitability In CY23

RBC Capital analyst Rishi Jaluria maintained Pegasystems Inc PEGA with an Outperform and raised the price target from $42 to $55.
The Q4 revenue was $396 million, up 25% Y/Y, above the consensus of $335 million. Non-GAAP EPS was $0.82, vs. consensus of $(0.26).
Pega reported solid Q4 results and guidance, especially in light of an uneven macro.
Jaluria's most important takeaway was guidance calling for meaningful profitability in CY23, which should give the name FCF support.
Other notable highlights included improvement in Pega Cloud gross margins, stable ACV growth, and guidance seeming appropriately de-risked, despite Pega being well-positioned with little reliance on new logos and serving high-end enterprises across diverse verticals.
Truist analyst Joe Meares reiterated Hold and increased the price target from $40 to $45.
PEGA reported 4Q results that were well ahead of expectations on revenue, profitability, and FCF.
Management is righting the ship, and the stock continues to screen as cheap. Still, the analyst awaits a better entry point and more clarity & confidence around potential long-term target model changes, consistent FCF generation, and the ongoing Appian lawsuit.
Price Action: PEGA shares traded higher by 16.60% at $49.87 on the last check Thursday.

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