Pega’s stock rose 14.13 percent yesterday, according to Nasdaq’s market data.
Normally, only a big announcement or earnings result would have such a sudden impact on share prices.
Yet, the CRM provider owes these significant gains to the positive coverage from a single analyst, according to Motley Fool.
Daniel Ives, Senior Equities Research Analyst at Wedbush Securities, changed his rating of the stock from ‘neutral’ to ‘outperform’, with an increased one-year stock price target of $65, 15 dollars higher than previously.
The analyst did so after noting Pega’s swelling subscription revenues and growing margins from its SaaS services. The latter reflects a hike in its sales performance.
Meanwhile, his report also highlights how the $2BN judgment against Pegasystems – following a lawsuit from Appian – has mostly been accounted for in Pegasystems’ stock. Ives stated:
Pega will have to likely pay a small settlement at the end of the day that is significantly less than the original judgment… ending the nightmare this lawsuit has caused.
Yet, perhaps the most interesting part of the reasoning for Ives’ upgraded rating of Pega was its developing “AI story” – with an emphasis on automation.
At PegaWorld iNspire 2023, the company’s flagship technology event, Liz Miller, VP and Principal Analyst at Constellation Research, and Alan Trefler, Founder and CEO at Pegasystems, discussed this strategy.
In asking Trefler, what he was most excited about over the next two years, Miller recalls his response:
It is how much Pega’s customers’ employees, how Pega’s customers’ teams are actually going to be able to realize all of the personalization, all of the automation, all the execution and strategies that they have been envisaging in their heads.
As such, it seems Pega is betting on its customers, putting all the ideas they have had about automation into practice. Yet, that relies on two things going well.
First, the popularity of AI and automated services needs to hold up and, perhaps the bigger unknown is whether customers will have the time and creative energy to make it happen.
The more successful use cases emerge for this kind of technology, the more companies will be likely to want to invest their resources into it.
Miller summarised Pega’s interdependence with its customers: “Pegasystems wants everyone to know they have got the building blocks to be able to build that engine.
But they are going to need the people within all of their customers’ teams to be creative, to unleash all of those exciting strategies that they want to execute.
“[As a result] machines can actually execute that faster and bridge the gap in just how quickly we can make decisions.”
Learn more about Pega’s AI mission by reading our article: PegaWorld iNspire 2023 Introduces Us to the Autonomous Enterprise
