On Wednesday, Progress Software (NASDAQ:PRGS) shares received an updated price target of $70, an increase from the previous target of $66, while retaining its Outperform rating, following a robust third-quarter fiscal year 2024 performance. The company exceeded expectations with a broad demand for its product offerings and exhibited strong profitability metrics, with an operating margin (OM) of 41.5% and free cash flow margin (FCFM) of 31.7%.
The firm noted that Progress Software has experienced minimal disruption from the MOVEit breach and has recently been cleared by the Securities and Exchange Commission (SEC) of any wrongdoing. This clearance is expected to alleviate any negative impact the breach might have had on the company's stock.
Management at Progress Software has also expressed confidence in their ability to integrate ShareFile successfully and boost operating margins to over 40%. The firm's analysis suggests that as Progress moves beyond the breach with limited impact, the overhang on the stock should diminish.
The adjusted estimates take into account both the recent quarter's results and the company's guidance. The firm's stance remains positive on Progress Software's trajectory, citing the company's consistent ability to deliver steady top-line growth coupled with robust profitability.
In summary, the firm maintains its Outperform rating on Progress Software and has raised the price target to $70 from $66, reflecting confidence in the company's future financial performance and strategic initiatives.
In other recent news, Progress Software reported noteworthy Q3 results, surpassing analyst estimates with adjusted earnings per share of $1.26 and revenue of $179 million. These figures represent a 2% year-over-year increase, prompting the company to raise its full-year guidance. The revised outlook anticipates adjusted earnings per share between $4.75 and $4.85, and revenue between $745 million and $755 million.
In a strategic move anticipated to bolster growth, Progress Software also announced plans to acquire ShareFile from Cloud Software Group for $875 million. The acquisition is expected to close before the end of the fiscal year.
In response to these developments, DA Davidson raised its price target for Progress Software to $70.00, maintaining a Buy rating. The firm's decision reflects confidence in Progress Software's growth prospects, particularly in light of its ability to achieve significant inorganic growth and maintain best-in-class margins. DA Davidson's positive outlook is based on the company's current performance and market position.
InvestingPro Insights
In light of Progress Software's (NASDAQ:PRGS) recent achievements and the updated price target, InvestingPro data provides additional context for investors. The company boasts a market capitalization of $2.45 billion and an impressive gross profit margin of 85.91% for the last twelve months as of Q2 2024, underlining its efficiency in generating revenue while controlling costs. The forward-looking P/E ratio stands at 28.63, suggesting that investors are expecting earnings growth in the near future. This aligns with the InvestingPro Tip indicating that net income is expected to grow this year.
Another InvestingPro Tip highlights that Progress Software has an admirable track record of profitability, which is corroborated by its strong return over the last three months, showing a 17.7% price total return. This performance is particularly noteworthy considering the company's trading near its 52-week high, with the price at 94.73% of this peak. For investors seeking additional insights, there are 10 more InvestingPro Tips available, including perspectives on valuation, stock volatility, and analyst predictions. These tips, along with real-time metrics and expert analysis, can be found at InvestingPro.
The data and tips provided by InvestingPro not only reinforce the positive outlook shared by the analysts but also offer a broader view of the company's financial health and market position, which could be invaluable for investors making informed decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.