KeyBanc starts on Pegasystems and Appian, sees growth in workflow automation

Investing.com -- KeyBanc Capital Markets initiated coverage of Pegasystems Inc (NASDAQ: PEGA) with an "Overweight" rating and a $118 price target on potential for growth driven by the company's AI-driven product and expanding cloud migration. Brokerage started Appian Corp (NASDAQ: APPN) with a "Sector Weight" rating, citing balanced risk-reward.

KeyBanc highlighted PEGA's attractive valuation, trading at 18.5x 2026 EV/FCF, below the 23.5x average for software peers with under 20% growth.

The brokerage pointed to PEGA's "GenAI Blueprint" and refined go-to-market strategy as catalysts for accelerating annual contract value (ACV) growth and free cash flow margins.

The note projected low-teens ACV growth and high-teens FCF growth over the near-to-mid-term, positioning the company to outperform broader software sector peers.

While positive on Appian's expansion efforts and recent pricing adjustments, KeyBanc noted uncertainty around the company’s long-term growth and margin outlook. Shares currently trade at 3.5x 2026 EV/sales, slightly above the average for cash-flow-negative software companies, which KeyBanc views as fair value.

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