UPDATE: Evercore Upgrades The Ultimate Software Group on Compelling SMID-Cap SaaS Name With Growth and Margins

In a report published Wednesday, Evercore analyst Kirk Materne upgraded the rating on The Ultimate Software Group (NASDAQ: ULTI) from Equal-Weight to Overweight, and named a $165.00 price target.

In the report, Evercore noted, “As part of our assumption of coverage we are upgrading shares of Ultimate Software (ULTI) to Overweight with a $165 price target (~20% upside from current levels). Our price target implies that shares can trade to 7.6x EV/CY15 Sales, which is a slight discount to faster-growth SaaS peers like WDAY, N and NOW, but does provide some multiple benefit for ULTI's high customer retention rates and above-market profitability. When looking out over the next 12-18 months, we believe there is room for numbers to push higher and our estimates could prove to be conservative (as we run through on pages 4-6). In our view, ULTI represents a unique SMID-cap asset among SaaS peers given its blend of +20% recurring revenue growth and profitability.”

The Ultimate Software Group closed on Tuesday at $137.81.