It's Not Too Late To Buy PROS Holdings, Stifel Says In Upgrade

Shares of PROS Holdings, Inc. PRO gained around 82 percent in 2018, but it’s “hardly too late on this stock” given that the company’s top line growth is accelerating and its free cash flows could be positive soon, according to Stifel.

The Analyst

Tom Roderick upgraded PROS Holdings from Hold to Buy and raised the price target from $46 to $60.

The Thesis

The SaaS software company’s move to the cloud seems like a good idea, Roderick said in the Thursday upgrade note. (See his track record here.)

PROS Holdings’ airline customers operate in a B2C-centric space where there is demand for dynamic pricing and related artificial intelligence capabilities, the analyst said. Even the B2B installed base has begun recognizing the importance of customer pricing sheets that are transparent, flexibly updated and in a digital format, he said. 

The rising interest in dynamic pricing in the B2B space — along with PROS Holdings’ moves to align itself with leading B2B e-commerce platforms — has “created an urgency in customer decision making that didn't necessarily seem to be there 3-5 years ago,” the analyst, Roderick said. 

PROS Holdings seems to be generating around 23-percent growth in recurring revenue this year, and total revenue appears to be accelerating from 17 percent in 2018 to 23 percent, the analyst said. 

Stifel expects free cash flow to turn positive in 2019 and EBITDA margins to approach breakeven by the fourth quarter. 

Price Action

PROS Holdings shares were up 2.34 percent at $52.86 at the time of publication Thursday. 

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