Pegasystems Inc. Just Beat EPS By 179%: Here's What Analysts Think Will Happen Next

As you might know, Pegasystems Inc. (NASDAQ:PEGA) just kicked off its latest second-quarter results with some very strong numbers. The company beat forecasts, with revenue of US$385m, some 5.9% above estimates, and statutory earnings per share (EPS) coming in at US$0.17, 179% ahead of expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Taking into account the latest results, Pegasystems' 13 analysts currently expect revenues in 2025 to be US$1.71b, approximately in line with the last 12 months. Statutory earnings per share are forecast to shrink 9.9% to US$1.16 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.68b and earnings per share (EPS) of US$1.06 in 2025. So the consensus seems to have become somewhat more optimistic on Pegasystems' earnings potential following these results.

See our latest analysis for Pegasystems

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 17% to US$61.56. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Pegasystems, with the most bullish analyst valuing it at US$78.00 and the most bearish at US$40.19 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Pegasystems' revenue growth is expected to slow, with the forecast 3.8% annualised growth rate until the end of 2025 being well below the historical 9.6% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 13% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Pegasystems.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Pegasystems following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Pegasystems' revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Pegasystems going out to 2027, and you can see them free on our platform here.

We also provide an overview of the Pegasystems Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.