Market Got It Wrong—Why Progress Software Deserves a Second Look

September 17, 2024 at 08:45 AM EDT

New York, USA - 1 August 2024: Progress Software Logo on Phone Screen, Company Icon on Display. — Stock Editorial Photography

Progress Software Co. (NASDAQ: PRGS) provides software solutions that enable enterprises to design, develop, deploy, automate, and manage business applications. Its products are focused on helping organizations accelerate their digital transformation, enhance user experiences, and modernize their IT infrastructure. Its tools and architecture enable clients to build artificial intelligence (AI)-powered applications and experiences.

Progress Software has over 17,000 clients, including well-known computer and technology sector companies like Pure Storage Inc. (NYSE: PSTG), Globant Inc. (NYSE: GLOB), and EPAM Systems Inc. (NYSE: EPAM).

Progress Software’s Key Offerings

The company's diverse offerings address specific facets of infrastructure management, including DevOps and DevSecOps, security and risk management, and full-stack observability. Here are some of its top products:

Chef is a DevOps and DevSecOps automation platform that enables businesses to automate software development. It lets users automate the configuration, deployment, and management of applications and infrastructure across all environments, including on-premise, cloud, edge, and hybrid. It also enables users to secure cloud-native assets on any cloud and achieve push-button compliance.
WhatsUp Gold is an IT infrastructure monitoring application that enables users to instantly monitor up and down status, availability, and performance. It provides full-stack observability for on-premise and cloud. It catches network issues quicker than users can report them, allowing for faster and smarter troubleshooting to avoid downtime.
Sitefinity is a content management system (CMS) that enables clients to design, develop, and manage online experiences, including websites, content, and portals.
Flowman is an AI-powered network and security monitoring platform that detects anomalies and cyber threats and provides actionable insights into application and network performance.

Progress Software Acquires ShareFile for $875 Million

On Sept. 9, 2025, Progress Software announced the acquisition of ShareFile from Cloud Software Group for $875 million. This was a large acquisition, considering Progress Software's market capitalization stands at around $2.5 billion. ShareFile is an AI-powered, document-centric collaboration platform that fits synergistically with Progress Software’s offerings by providing more efficient team and client collaboration.

It simplifies the sharing of documents, data and content securely. It automates workflows and provides integrated eSignature features. It also uses generative AI to provide a simple self-service user experience that automatically summarizes documents and creates Q&A related to them. ShareFile is comparable to Dropbox Inc. (NASDAQ: DBX), a competing data storage and collaboration platform provider.

ShareFile Adds New Accounts and Addition Revenue, But Dividend Gets Halted

The acquisition will add over 86,000 new customers and an additional $240 million to annual revenue. The deal is expected to be closed by the end of November 2024. It will be paid with cash on hand and with its existing credit revolver. Progress Software is also suspending its dividend after completing the acquisition, opting to use the money to pay down debt and increase liquidity for future acquisitions and stock buybacks.

Assuaging Investing Concerns on the Acquisition

Progress believes it can leverage its existing sales support and operating platform as ShareFile's customer base includes industries in healthcare, real estate, financial services, accounting, and legal services. The deal was a bargain at just 3.6x sales and is tax-advantaged as an asset purchase transaction. Progress Software also raised its fiscal third-quarter 2024 guidance of EPS of $1.14 and revenues of $175.94 million heading into its Sept. 24, 2024, earnings release.

The acquisition news initially caused shares to drop 2.5% on Sept. 9, 2024, but the market quickly realized the benefits, and shares recovered promptly.

PRGS Stock Is in a Symmetrical Triangle Pattern

A symmetrical triangle is comprised of two converging trendlines: descending upper trendline resistance connecting lower highs and ascending lower trendline support connecting higher lows. As the stock edges closer to the apex point, it will either break out through the upper falling trendline or break down below the lower rising trendline.

Progress Software PRGS stock chart

PRGS formed a symmetrical triangle with the upper trendline commencing at the $59.72 swing high and the lower trendline forming at the $53.94 swing low. The channel is tightening as shares get closer to the apex point and imminent breakout through the upper trendline or breakdown through the lower trendline. The daily relative strength index (RSI) is curling back up at the 56-band. Fibonacci (Fib) pullback support levels are at $55.30, $52.58, $49.48, and $45.04.

Progress Software's consensus analyst price target is at $63.50, with its highest analyst price target at $68.00.

Maximize Gains and Limit Risk with PRGS Options Strategies

Progress Software's earnings report is due out on Sept. 24, 2024. PRGS surged 12.84% higher on its previous earnings report. However, bullish investors may wait until after it is reported to consider entry. Bullish investors can consider using cash-secured puts at the Fib pullback support levels to buy the dip. If assigned the shares, then writing covered call at upside Fib levels executes a wheel strategy for income since there is no dividend.

Bullish options investors can limit the maximum downside by implementing a bullish call debit spread. This strategy allows them to benefit from potential stock price gains using less capital than owning the stock.

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