Needham & Company Raises Price Target Following Ultimate Software Group's (ULTI) 3Q

Needham & Company reiterated a Buy rating on Ultimate Software (NASDAQ: ULTI), and raised the price target to $220.00 (from $195.00), following the company's 3Q15 earnings results. ULTI reported revenues and EPS of $155.3mm and $0.69. The underperformance of revenues was mainly attributed to the timing of professional services revenues. The company reaffirmed FY guidance for 2015 with total revenues expected to grow by approximately 22%, recurring revenues to grow 23%, and operating margins to exceed 20%.

Analyst Scott Berg commented, "We reiterate our Buy rating on ULTI and raise our PT to $220 based on a customer demand environment that continues to strengthen, even above our bullish expectations from our recent industry checks. While some may focus on 3Q revenues that came in slightly below consensus because of professional services timing, we believe the accelerating recurring revenue growth rate in FY16 and improving cash flow margins will trump any transitory 3Q concerns. We believe marketing metrics continue to be leading indicators and the acceleration in sales rep hiring are indicators that the current demand strength likely extends beyond 2016. We believe the current industry demand trends coupled with ULTI's consistent strong execution yields significant visibility to its 2018 $1B revenue goal."

For an analyst ratings summary and ratings history on Ultimate Software click here. For more ratings news on Ultimate Software click here.

Shares of Ultimate Software closed at $189.38 yesterday.

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