In his latest report, Wedbush analyst Dan Ives revealed his top AI picks for 2025. Among them is Pegasystems. Nasdaq: BIGA. The software company has already had a great 2024, with shares delivering a total return of 91%. Wedbush, as well as other Wall Street analysts, remain bullish on technology stocks though. Analysts at Royal Bank of Canada New York Stock Exchange: RE And Citigroup New York Stock Exchange: c They updated their price targets last month. Monday’s average suggests Pegasystems shares are up 24%, as of the Jan. 8 close.
Below, I’ll detail what Pegasystems does and provide an overview of its recent financial results. I’ll also break down what Pega needs to do to succeed in 2025.
Pega: Improving customer acquisition, service and business processes through artificial intelligence
Pegasystems today
Effective 01/08/2025 at 04:00 PM ET
- 52 week range
- $45.36
▼
$97.94
- Dividend yield
- 0.12%
- P/E ratio
- 70.14
- Price target
- $91.50
Pega highlights three business problems it is solving. The first is improving customer engagement. Our AI-powered CRM platform, Pega Customer Decision Hub, helps dramatically personalize customer experiences. It predicts customer behavior and suggests actions to help employees close sales. Ultimately, it’s about improving customer acquisition and retention.
The company is also working to help streamline customer service. Pega Customer Service improves the efficiency of handling inquiries. It uses AI-powered virtual assistants and industry-specific processes to do this.
The last is to enhance efficiency through intelligent automation. The Pega Platform allows businesses to analyze and automate legacy workflows. The Pega platform integrates with hundreds of other software applications. Employees can then use it to set up automation within other types of software they use. Pega will essentially mimic the human work that someone might need to do after setting it up. Customers can also create full applications using Pega Express.
A key aspect of Pega’s value proposition is that it is “low-code”. This means that employees can automate processes and create applications without needing programming knowledge. This can significantly reduce the amount companies pay to software developers Average salary is $132,000. It also helps reduce the risk of miscommunication between departments. Anyone working in HR can build an app themselves exactly the way they want. You don’t have to worry about a software developer not properly translating their vision into reality.
Pega: Strong growth with improved profitability
Pegasystems MarketRank™ stock analysis
- Total MarketRank™
- Percentage 96
- Analyst evaluation
- Moderate purchase
- Upside/Downside
- 4.8% negatives
- Short interest level
- correct
- Earnings power
- weak
- Environmental outcome
- -0.38
- News feelings
- 0.57
- Insider trading
- Selling shares
- project. Earnings growth
- 15.53%
See full analysis
Over the past 12 months, Pega’s revenues have increased at a respectable but not devastating 9%. Overall, the company has a wide variation in its revenue growth each quarter. However, since September 2023, the company has made significant progress in its profitability. Gross margin for the latest 12 months increased by more than 200 basis points.
The trailing 12-month operating margin and net income margin were around 0% in September 2023. Now they are around 12% and more than 7%, respectively. Its free cash flow is nearly double year to date in 2024 versus 2023. In the third quarter of 2024, The backlog was also 17% higher A year ago. However, since the beginning of 2024, backlog growth has remained somewhat stagnant.
Pega: Needs more AI execution and innovation to win in 2025
Pega’s ability to succeed in 2025 depends on betting that companies will make aggressive efforts to implement AI. Given that most people still believe we are in the early stages of artificial intelligence, this is likely to be the case. Much of Ives’ positivity about these AI names comes from his belief that AI is still “in the second half” of its journey.
Another key element of Pega’s success is its ability to continue to innovate and create products that customers can get more value from. Company GenAI chart tool This is an example of how this can be done in 2024. The tool allows companies to analyze their legacy processes and rethink how they are set up.
Companies define the problem they want to solve and enter historical data. Using industry best practices, Pega uses AI to create starting points for creating a new application. It then walks the user through the process of creating the app and the specific things it will automate. New chart feature Gartner helped name Pega A leader in enterprise low-code application platforms (LCAP).
Pega has a lot to achieve, including improved profitability, technology leadership, and being in the early stages of the AI movement. It also trades at a group-average price-to-earnings ratio of 32x versus rivals. It certainly wouldn’t be crazy to see Pegasystems have another strong year in 2025.
Before you consider Pegasystems, you’ll want to hear this.
MarketBeat tracks the highest-rated and best-performing research analysts on Wall Street and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market hits… and Pegasystems was not on the list.
While Pegasystems currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.
View the five stocks here
If a company’s CEO, COO, and CFO were all selling shares of their stock, would you want to know?
