Progress Software's M&A Strategy Likely to Benefit From Tough Macro Environment, Oppenheimer Says

11:11 AM EDT, 04/01/2025 (MT Newswires) -- Progress Software ( PRGS ) reported "encouraging" fiscal first-quarter results in a challenging environment that could help expand the software company's potential acquisition pipeline, Oppenheimer said in a note emailed Tuesday.

The company late Monday posted stronger-than-expected results for the quarter ended Feb. 28 and raised the earnings outlook for the ongoing fiscal year. Progress Software ( PRGS ) has filed a shelf registration statement, allowing it to access capital markets in the future and boosting its ability to make acquisitions, Chief Executive Yogesh Gupta said during an earnings call, according to a FactSet transcript.

"We do see significant opportunities in the (merger and acquisition) market," Gupta told analysts. "There are multitude of good companies and products that we believe will be coming to the market and continued higher interest rates have made us meaningfully more competitive for deals when competing against strategic and financial buyers."

The tough macro set-up likely bodes well for Progress Software ( PRGS ) in its hunt for an acquisition target, Oppenheimer analysts, including Ittai Kidron, said.

"The recently filed shelf and efficient ShareFile integration suggests management's already positioning for its next target," Kidron said. "We're positive on management's execution and believe the unsettled environment favors the resiliency of Progress' tightly run business model and may catalyze a growing pipeline of M&A targets."

The brokerage reiterated its outperform rating on the stock and a price target of $80. The stock rose nearly 7% in Tuesday trade, but is down about 15% this year.

The integration of recently acquired document collaboration business ShareFile is proceeding "as expected and probably a bit better," Gupta said on the call. The integration is expected to complete by the end of the fiscal year.

Non-GAAP earnings rose to $1.31 per share in the first quarter from $1.25 a year earlier, surpassing the consensus on FactSet for $1.06. Revenue jumped 29% to $238 million, topping analysts' expectation for $235.6 million.

Progress Software ( PRGS ) now expects fiscal 2025 non-GAAP EPS of $5.25 to $5.37, compared with a prior outlook of $5 to $5.12. Analysts are looking for $5.27. The company affirmed its revenue outlook of $958 million to $970 million, while the Street projects $964.9 million. For the second quarter, non-GAAP EPS is expected between $1.28 and $1.34 on revenue of $235 million to $241 million. Analysts forecast $1.28 and $237.2 million, respectively.

Price: 56.70, Change: +5.19, Percent Change: +10.08

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