NEW YORK (TheStreet) -- Shares of Pegasystems Inc. (PEGA - Get Report) are higher by 3.21% to $19.96 in pre-market trading on Wednesday following a ratings upgrade to "outperform" from "neutral" at Wedbush Securities on Wednesday.
The firm said it upped its rating on the company, which develops, markets, licenses and supports software, so customers can build and develop enterprise applications, as Pegasystems continues to grow its business through strategic partnerships.
Wedbush raised its price target on the stock to $27 from $25.
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Separately, TheStreet Ratings team rates PEGASYSTEMS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate PEGASYSTEMS INC (PEGA) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.6%. Since the same quarter one year prior, revenues rose by 20.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- PEGA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, PEGA has a quick ratio of 1.78, which demonstrates the ability of the company to cover short-term liquidity needs.
- The net income growth from the same quarter one year ago has exceeded that of the Software industry average, but is less than that of the S&P 500. The net income increased by 7.7% when compared to the same quarter one year prior, going from $9.07 million to $9.77 million.
- The gross profit margin for PEGASYSTEMS INC is currently very high, coming in at 70.11%. Regardless of PEGA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PEGA's net profit margin of 6.95% is significantly lower than the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Software industry and the overall market, PEGASYSTEMS INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: PEGA Ratings Report