Pegasystems crashes 17% as Wedbush downgrades following 'disaster quarter'
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Pegasystems (NASDAQ:PEGA) shares crashed 17% on Thursday after the customer relationship management software company reported a weak second-quarter, prompting investment firm Wedbush to downgrade the stock.
Analyst Dan Ives lowered his rating on Pegasystems (PEGA) to neutral from outperform and cut the price target by more than 50% to $40 from $95, noting that the company saw a "major growth hurdle" during the quarter, citing a softening deal environment. 
"In a nutshell we are moving to the sidelines on this name as this quarter appears to be the first shoe to drop in the PEGA story fundamentally and we fear more pain could be ahead as we were surprised by the degree of difficulty closing deals in the quarter," Ives wrote in a note to clients.
Ives also noted that the lawsuit with Appian (TEAM) is still an "overhang" that adds more consternation to the story at a "tenuous time," with the legal process set to play out over the coming months.
For the second-quarter, Pegaystems (PEGA) generated $274.33M in revenue, down 15.8% year-over-year and missing estimates by nearly $64M.
Cloud revenue rose 28% year-over-year to $93.51M, but maintenance revenues and subscription license both fell during the period to $78.33M and $41.6M, respectively. On an adjusted basis, the company lost 38 cents per share, far below analysts' estimates of a 43 cent gain in earnings. 
In May, Pegaystems (PEGA) lost its lawsuit with Appian (TEAM), but the company is in the process of considering appealing the ruling.
Analysts are all over the spectrum on Pegasytems (PEGA). It had an average rating of HOLD from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates PEGA a STRONG SELL.