JMP Securities Sees Reasons For Long-Term Optimism For Progress Software

In a report published Thursday, JMP Securities analyst Greg McDowell reiterated a Market Perform rating on Progress Software Corporation (NASDAQ: PRGS).

In the report, JMP Securities noted, "We maintain our Market Perform rating on Progress Software after the company reported 1Q15 non-GAAP revenue of $95.2 million, up 28% yoy (up 2% excluding revenue from recent acquisitions and foreign currency headwinds), versus consensus of $94.4 million, and non-GAAP EPS of $0.29 versus consensus of $0.24, leading the stock to trade up ~1% in the aftermarket. The company guided below consensus for both Q2 and FY15 on both non-GAAP revenue and non-GAAP EPS.

"Stepping back, we remain on the sidelines due to our concerns over OpenEdge's long-term prospects, but feel we could become more constructive on the name: 1) if we see evidence that Progress Pacific is gaining traction; and 2) if the recent acquisitions of BravePoint and Telerik prove to be winners for Progress.

"We lower our 2015 non-GAAP EPS estimate from $1.42 to $1.39, versus consensus of $1.44; and lower our 2016 non-GAAP EPS estimate from $1.52 to $1.47, versus consensus of $1.60. At the current price of ~ $27, Progress Software trades at a 2016 P/E ratio of 18x, a discount to the peer group median that we believe is appropriate given the challenges the company currently faces."

Progress Software closed on Wednesday at $26.99.