Citizens reduced its price target on Pegasystems Inc. to $58.00 from $78.00 on Thursday, but kept a Market Outperform rating on the enterprise software vendor.
The adjustment follows Pegasystems’ fourth-quarter 2025 earnings report, released Tuesday after the market close, which produced results that outpaced analyst forecasts but revealed some signs of slowing momentum.
Pega reported non-GAAP earnings per share of $0.76, slightly above the Street expectation of $0.73. Revenue came in at $504 million versus a consensus figure of $492 million, representing about 3% year-over-year growth.
Annual contract value for the company reached $1.608 billion, topping the $1.573 billion consensus and marking a 17% increase from a year earlier. On a constant-currency basis, however, ARR growth slowed to 13.8%, down from 14.1% in the prior quarter.
Free cash flow was stronger than expected as well, with Pegasystems generating $152 million against a consensus estimate of $111 million. Despite those upside surprises on earnings, revenue and cash generation, the stock tumbled roughly 12% immediately after the earnings release, widening its year-to-date decline to around 36% while the Russell 3000 has risen approximately 2% over the same period.
In a separate move, Barclays raised its rating on Pegasystems from Equalweight to Overweight and set a $48.00 price target. Barclays cited the company’s competitive position in complex business process software and said the segment is unlikely to see significant disruption from generative AI in the foreseeable future.
The mix of upside beats and signs of deceleration appears to have driven divergent analyst responses: Citizens trimmed its target substantially but held to a Market Outperform stance, while Barclays upgraded its view and set a lower target than Citizens’ revised level. The market reaction suggests investors prioritized the company’s moderating growth trend and the immediate earning-period volatility over the topline and cash-flow beats.
Market implications
- The reaction highlights investor sensitivity to growth trajectory and quarter-to-quarter deceleration even when headline earnings and cash flow beat expectations.
- Analyst positioning remains mixed, with at least one firm raising its rating while another reduced its price objective and retained an outperform view.
- Enterprise software and broader software sector sentiment may be affected by how investors interpret growth deceleration versus cash flow strength.