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Pegasystems (PEGA) has bullish Chaikin Power Gauge stock rating and triggered a Relative Strength Buy Signal in Chaikin Analytics based on Friday’s sharp upside reversal. PEGA has been significantly outperforming the market since late May and recently reported a very bullish 2nd quarter 2015 earnings surprise.
Buy PEGA on any further dips in anticipation of a resumption of the upward momentum generated by their recent earnings report.
Pegasystems provides Customer Relationship Management software and has recently rolled out a cloud-based software capability that has caught on with corporate customers and reduced their dependency on enterprise sales. Their software spans the gamut from traditional call center channels to cloud based internet self-service solutions. Their Pega 7 applications development program has been favorably reviewed by leading consulting firms like Gartner Group and CapGemini. Their Pega Cloud solution has enabled PEGA to jump start new business development.
PEGA’s July 29th 2nd quarter earnings report beat Wall Street estimates by 15%, as the company reported earnings of $0.14 vs. estimates of $0.12. Revenues came in at $162 million vs. Wall Street estimates of $152 million. This continued a trend that has seen revenues more than double since 2009.
PEGA’s stock reacted dramatically to the positive 2nd quarter report, spiking up almost 20% to a new all-time high of $27.91 on July 30. The ensuing sideways consolidation that often leads to further highs was interrupted by the August market weakness. With the stock now coming off an oversold condition, a buying opportunity is at hand.
While the stock is not cheap with a P/E of 28 times 2016 earnings projections, it has given positive guidance and grown its backlog by 11%. The company is projecting low double digit earnings growth, but with a growing backlog and sharply higher growth rates in their cloud software offerings, PEGA is an attractive investment at current levels.
It should be noted that the company competes with industry giants, Oracle (ORCL) and Salesforce.com (CRM). The possibility of a takeover bid by a larger competitor is a potential kicker for PEGA.
Pegasystems has a bullish Chaikin Power Gauge stock rating that is driven by three out of four Components of the Power Gauge: Earnings, Technicals and Expert Opinions. PEGA is in the strong Computer Software industry group and its Relative Strength to the market is very positive. The company has delivered consistent earnings growth and recently reported a bullish earnings surprise. Analyst ratings have been upgraded since PEGA’s July earnings surprise.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
