It's been a mediocre week for Pegasystems Inc. (NASDAQ:PEGA) shareholders, with the stock dropping 19% to US$85.02 in the week since its latest yearly results. Revenues were US$1.5b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$1.11 were also better than expected, beating analyst predictions by 14%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Pegasystems

Taking into account the latest results, the most recent consensus for Pegasystems from 13 analysts is for revenues of US$1.59b in 2025. If met, it would imply a satisfactory 6.4% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to leap 60% to US$1.85. In the lead-up to this report, the analysts had been modelling revenues of US$1.58b and earnings per share (EPS) of US$2.00 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The consensus price target held steady at US$105, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Pegasystems at US$125 per share, while the most bearish prices it at US$78.12. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Pegasystems' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Pegasystems' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 6.4% growth on an annualised basis. This is compared to a historical growth rate of 9.5% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 12% 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 to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment 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. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Pegasystems going out to 2027, and you can see them free on our platform here.

You can also see our analysis of Pegasystems' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.