Barclays upgraded Pegasystems (NASDAQ:PEGA) from Equalweight to Overweight on Thursday while lowering its price target to $48.00 from $67.00. The bank said the revised target is closely aligned with InvestingPro’s Fair Value assessment and reflects its view that the shares remain undervalued despite a year-to-date decline exceeding 36%.
In its note, Barclays framed Pegasystems as a specialist in complex business process software that it does not expect to be materially disrupted by generative AI "for a very long time (or ever)." The firm highlighted the company’s progress at embedding AI capabilities into its product suite, specifically pointing to the Blueprint offering as an example of how Pegasystems is "embracing the new AI world well."
Barclays also drew attention to a dislocation between the stock’s market performance and the firm’s view of the underlying business. Year-to-date the Pegasystems share price has fallen roughly 36%, a steeper decline than the iShares Expanded Tech-Software Sector ETF (IGV), which is down about 21% over the same period, according to the note.
The analyst firm disputed the notion that Pegasystems is a low-growth business, saying the company is positioned for revenue acceleration driven by Pega Cloud and the adoption of Blueprint. On a valuation basis, Barclays pointed out that the stock trades at approximately 9x EV/FCF using calendar year 2027 estimates.
Those comments arrive alongside Pegasystems’ reported fourth-quarter 2025 financial results, which topped Wall Street expectations. The company posted earnings per share of $0.76, above the consensus forecast of $0.73. Revenue for the quarter was $504.32 million, exceeding the anticipated $492.92 million.
Despite the stronger-than-expected EPS and revenue figures, Pegasystems’ stock declined in premarket trading following the release of results. The market reaction contrasted with analysts’ expectations of a more positive move given the reported performance.
The combination of Barclays’ upgrade, the trimmed price target, and the reported quarter frames the near-term narrative for Pegasystems around execution of its cloud strategy and integration of AI features, while the valuation metrics cited by Barclays provide context for investors evaluating the share price after a material year-to-date decline.
Sector and market implications: The update is relevant for enterprise software and broader technology sector investors tracking the adoption of AI-enhanced workflow tools, as well as market participants assessing relative performance within tech software benchmarks.