Summary
Stifel has downgraded Roper Technologies (NASDAQ: ROP) from Buy to Hold and lowered its price target to $385 from $550 following the companys fourth-quarter performance. The software-focused firm, which has a market capitalization of $39.8 billion, is trading at $369.27 - beneath Stifels reduced target.
Roper shares tumbled about 10% after management released fourth-quarter results that showed 4% organic revenue growth, short of Wall Streets roughly 5.5% expectation. The recent drop compounds a longer decline: the stock is down 27.15% over the past six months. InvestingPro data referenced by market observers indicates the relative strength index now suggests the stock is in oversold territory.
Stifel attributed the companys underperformance to multiple operating headwinds, calling out continued softness at Deltek, persistent tariff-related weakness at Neptune, and lower Networking perpetual-license revenue. Those unit-level pressures helped drive the analysts reassessment of both near-term results and the stocks outlook.
On valuation, Stifel observed that much of the negative news appears priced into the shares, which trade at about 13.5 times calendar-year 2027 estimated price-to-free cash flow. Nevertheless, the firm warned that Ropers management outlook for 2026 may not be fully de-risked because it relies on an acceleration in the second half of the year.
Beyond the headline downgrade, Stifel highlighted concerns about Ropers ability to execute its free cash flow compounding strategy. The analyst noted the stock now trades below what are likely to be the multiples needed to support future scaled acquisitions, raising questions about how acquisitive growth would be funded at attractive returns.
Separately, Roper reported mixed fourth-quarter results for fiscal 2025, beating consensus on earnings per share while missing revenue estimates. That combination has prompted a cautious reception from investors and analysts.
Oppenheimer also took action on Roper, moving its rating from Outperform to Perform and withdrawing its price target. Oppenheimer pointed to a weak outlook and identified similar unit-level challenges affecting Deltek, Procare, DAT, and Neptune as drivers of its downgrade.
Key points
- Stifel downgraded Roper from Buy to Hold and cut its price target to $385 from $550.
- Roper reported 4% organic revenue growth in the fourth quarter versus an expected roughly 5.5%, and shares fell about 10% on the news; the stock is down 27.15% over six months.
- Unit weakness cited includes Deltek softness, tariff-related headwinds at Neptune, and lower Networking perpetual-license revenue; Oppenheimer also downgraded the stock citing problems across Deltek, Procare, DAT, and Neptune.
Market and sector impact
- Software and enterprise applications businesses connected to Ropers portfolio are the most directly affected.
- Networking revenue dynamics and tariff-exposed product lines face near-term scrutiny from investors evaluating revenue trajectories.
Risks and uncertainties
- Managements 2026 outlook depends on a second-half acceleration that Stifel views as not fully de-risked - introducing execution risk into near-term forecasts.
- Ropers ability to compound free cash flow through acquisitions is uncertain given the current share price relative to likely acquisition multiples.
- Continued softness across several business units, including Deltek, Procare, DAT, and Neptune, could pressure future revenue and investor sentiment.
Investors and market participants will likely watch upcoming quarterly updates and management commentary for signs that revenue momentum and free cash flow execution are improving or that assumptions underpinning 2026 guidance are being revised.