UPDATE: Deutsche Bank Raises PT on Rally Software Development Following 1Q14 Results

In a report published Friday, Deutsche Bank analyst Greg Poole reiterated a Buy rating on

, and raised the price target from $25.00 to $26.00. In the report, Deutsche Bank noted, “1Q14 results ahead of expectations. Rally Software reported subscription revenue of $13.4m that was ahead of our $13m estimate and represented growth of 40% y/y vs 39% in 4Q13 and 48% in 1Q13. Perpetual licenses declined 61% y/y and combined with +11% pro services revenue to reduce total revenue growth to 24% vs 38% in 4Q13 and 34% in 1Q13. We believe that subscription revenue is the best indicator of business momentum, since perpetual revenue is lumpy (and being deemphasized) and pro services is not a good leading indicator of future growth. We continue to see conservative estimates for the remainder of the year. Reiterate Buy and $26PT (from $25).” Rally Software Development Corp. closed on Thursday at $20.56.