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Pegasystems Inc PEGA

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Pegasystems' Transition Shows Accelerating Revenue and Strong Profitability; FVE Stable at $157

Dan Romanoff, CPA Equity Analyst

Analyst Note

| Dan Romanoff, CPA |

Narrow-moat Pegasystems reported in-line revenue with better-than-expected profitability for its first quarter as the cloud transition continues to accelerate, which we believe is ultimately better for the company, customers, and investors alike. Management did not provide an update to guidance, but we may see that next week at the investor day. We share management’s optimism that customers will look to streamline their processes in order to navigate the uncertainty from the pandemic, which bodes well for the firm’s digital transformation solutions. We are holding our fair value estimate steady at $157 per share after incorporating results and fine-tuning our model. We see room for upside to our model as we remain below management’s target of $1.6 billion in revenue in 2022. We see the shares as undervalued and continue to think that owning the stock will become easier in the next couple of years thanks to improving accounting optics.

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Company Profile

Business Description

Founded in 1983, Pegasystems provides a suite of solutions for customer engagement and business process automation. The company’s key offering is the Pega Infinity platform, which combines business process automation with customer engagement applications.

One Rogers Street
Cambridge, MA, 02142-1209
T +1 617 374-9600
Sector Technology
Industry Software - Application
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Classic Growth
Employees 5,776