PEGA Stock Set For Worst Day In Nearly 2.5 Years – Client Spending Delays Have This Analyst Worried

Citizens downgraded Pegasystems, saying it wants to better understand the factors that are influencing customers to delay purchases with the company.

• For Q2, the company’s revenue was $420.7 million, and earnings per share were $0.35.
• Pegasystems also highlighted that the ACV growth rate slowed significantly during the six months ended June 30.
• The company attributed the weak Q2 results to volatile conditions in the artificial intelligence market.

Shares of Pegasystems (PEGA) slumped in Wednesday’s premarket trade after the company flagged delays in client spending in its second-quarter earnings report that could affect its financials for the remainder of the year, prompting Citizens to cut its rating on the stock.

As of the writing, PEGA stock is down more than 17% and on track for its lowest level in nearly two-and-a-half years, if session losses hold.

Citizens Downgrades PEGA On Enterprise Spending Concerns

The analyst said they were “disappointed” by the company’s second-quarter results, according to TheFly. Pegasystems, which makes workflow automation and CRM software, attributed the weak second-quarter results to volatile conditions in the artificial intelligence market, which made its customers hesitant to spend on its services.

Citizens justified the downgrade, saying it wants to better understand the factors that are influencing customers to delay purchases with the company. In a separate report from Investing.com, the analyst reportedly said the company’s comments echo IBM’s July 14 preliminary second-quarter update.

The firm has a “market perform” rating, downgraded from “outperform,” and eliminated the price target on the stock.

PEGA Q2 Results Recap

For Q2, the company’s revenue rose more than 9% to $420.7 million, but came short of the Fiscal AI consensus estimate of $428.4 million. Earnings per share (EPS) came in at $0.35, below the $0.43 estimate.

“Unprecedented changes in the AI market caused clients to delay their purchasing decisions,” the company said in a statement, adding that these factors may continue to adversely affect the company’s annual contract value (ACV) growth rate and cash flow generation for the rest of the year.

Pegasystems also highlighted that ACV growth rate significantly slowed during the six months ended June 30, coming in at 6%, while it was 16% for the same period a year earlier.

What Retail Traders Think About PEGA

On Stocktwits, retail sentiment toward PEGA remained in ‘bullish’ territory over the last 24 hours, with many users taking note of the company’s warning.

However, one bullish user on the platform said AI will help software platforms, and software will become more productive over time.

View this Stocktwits post

PEGA stock has declined more than 48% so far this year and about 40% over the past 12 months, underperforming the S&P 500.

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