Roper Technologies (ROP): 3Q Review: Upgrade to Neutral as Organic Growth Accelerates and M&A Prospects Improve

We are upgrading Roper Technologies to Neutral from Underweight following the 3Q26 earnings report, with evidence of improving organic growth across the Software portfolio. Organic acceleration to 7% in 3Q from 5% in 2Q was driven by both Software segments (Application and Network), with further stabilization at Deltek and continued supply-side recovery in DAT. In addition to high single-digit organic growth, the improving backdrop for Software M&A sets up the company to accelerate total revenue growth. The company now has $6B of capital available to deploy in the next 12 months, implying the opportunity to add $500M-$1B of revenue in the medium-term outside of organic growth, and deployed $436M toward bolt-on acquisitions in 3Q for an estimated $75M of revenue. 3Q revenue rose 8% Y/Y to $2.172B, in line with consensus, while adjusted DEPS increased 15% to $5.89, above consensus of $5.79. FY26 adjusted DEPS guidance was raised and narrowed to $22.35-$22.40. We are raising our earnings