DA Davidson has reiterated its Buy recommendation on Progress Software (NASDAQ:PRGS) and maintained a $70.00 price target following on-the-record discussions with the company’s finance leadership. That target equates to about a 70% uplift from the prevailing share price of $41.11 and aligns with consensus analyst sentiment that currently skews toward a Strong Buy, with price targets in the analyst community spanning $45 to $83.
The firm’s update follows a series of meetings held in Boston with Progress Software’s Chief Financial Officer, Anthony Folger, and Head of Investor Relations, Michael Micciche. DA Davidson said those conversations reinforced its view that Progress is positioned to keep pace with innovation - including developments related to artificial intelligence - that could affect the company’s product set and go-to-market strategy.
DA Davidson underscored several financial strengths that inform its thesis. Progress reported gross profit margins near 85%, a figure the research team highlighted as a core advantage for the business. Revenue has risen at an accelerated clip as well - nearly 30% over the trailing twelve months, according to the firm’s review - and the company delivered a strong finish to its fiscal year, driven by healthy net new annual recurring revenue (ARR) and accelerating software-as-a-service (SaaS) revenue streams.
The research note also pointed to the company’s cash generation profile: Progress shows a roughly 14% free cash flow yield, a metric DA Davidson cited when arguing the stock may be undervalued at current levels. The firm referenced recent management actions, noting an active program of share repurchases, and said analysts expect net income to rise this year; the firm reported that six analysts have revised earnings estimates higher for the upcoming period.
DA Davidson’s reiteration comes amid broader investor debate about the long-term durability of software companies. The firm acknowledged that market skepticism exists but contends Progress’s margin structure, recurring revenue momentum and cash generation metrics support a more optimistic valuation case.
On recent quarterly results, Progress reported fourth-quarter results for fiscal 2025 that included an adjusted earnings per share of $1.51, topping the consensus forecast of $1.31. Revenue for the quarter came in at $252.66 million, a hair below the forecast of $252.71 million.
DA Davidson reiterated its $70 price target and Buy rating while calling attention to the company’s strong close to the fiscal year and the contribution of net new ARR and SaaS sales to that performance. The research note also highlighted potential expansion avenues, including customer retention dynamics and the possibility of growth through acquisitions.
Investors and market participants should weigh the firm’s bullish view against the sector-wide concerns DA Davidson cited, including questions about the sustainability of software growth profiles in changing macro and technological environments.
Key points
- DA Davidson reiterates a Buy rating on PRGS with a $70 price target, implying roughly 70% upside from $41.11.
- Progress posted near-85% gross profit margins and nearly 30% revenue growth over the past twelve months, driven by net new ARR and SaaS revenues.
- Recent metrics include a 14% free cash flow yield, active share buybacks, and six analysts who have raised earnings forecasts for the coming period.
Risks and uncertainties
- Market skepticism about the long-term durability of software companies could weigh on sentiment for PRGS and the broader software sector.
- Progress’s most recent quarter showed revenue that was narrowly below expectations, indicating sensitivity to revenue pacing even amid earnings beats.
- Growth plans that rely in part on acquisitions introduce execution and integration uncertainty for the company and investors.