Needham analyst Scott Berg upgraded the rating on Upland Software to a Buy today, setting a price target of $4.50.
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Scott Berg has given his Buy rating due to a combination of factors that indicate a positive outlook for Upland Software. The company has made significant strides in stabilizing its business operations by refining its product portfolio and returning to field sales. Additionally, Upland has successfully refinanced its debt, providing greater clarity around its cash flows.
With Upland expected to generate over $20 million in annual free cash flow, Berg believes the stock is undervalued at its current valuation. The company’s strategy to use cash to reduce high-interest debt is anticipated to support free cash flow growth of over 10%, even without achieving modest growth and margin targets. This de-leveraging effort is likely to attract new investor interest, as the recent debt refinancing alleviates immediate cash concerns. Consequently, Berg has upgraded Upland’s stock to a Buy rating, setting a price target of $4.50, based on an 8.0x FY25 EV/EBITDA multiple.