Jared Woodard, Head of the Research Investment Committee at Bank of America Securities, argues that stock splits can be very positive for shares. Woodard’s research found that in the 52 weeks after a company completed a stock split, its average return was over 25%. This far exceeded the average return of the S&P 500 of under 12%.
However, the research also shows that, on average, these stocks were already doing much better than the index before splitting. This raises the question: did the stock split actually cause the outperformance? Or did these stocks just keep the momentum they already had before the split? Either way, stock splits remain interesting events to pay attention to due to this potential for outperformance.
Three notable stocks joined the 2025 stock-split list in June: O'Reilly Automotive, Interactive Brokers Group, and Pegasystems. But which one is set to deliver the biggest upside?
1. O'Reilly Auto: 15-for-1 Split Slashes Price, Upside Tightly Caped
On June 10, O'Reilly Automotive (NASDAQ: ORLY) officially began trading at its post-stock split price.
The firm performed a 15-for-1 split, lowering its share price by over 93%. Prior to the split, the stock traded at north of $1,300. This is certainly a prohibitive price tag for many retail investors whose brokerages don’t allow the purchase of fractional shares.
The stock is now trading at around $89, which is much easier to stomach for many investors. This could drive significant demand for shares. However, the consensus price target among MarketBeat-tracked Wall Street analysts is just over $94, implying only around 6% upside in shares.
2. Interactive Brokers: 4-for-1 Split Lowers Price, But Competition Rising
Shares of Interactive Brokers Group (NASDAQ: IBKR) began trading at their post-split price on June 18, closing at just under $52 on June 24 after performing a 4-for-1 stock split.
Still, it is important to point out that the company’s share price pre-split was just north of $200. Although the split does make shares more accessible, the positive impact is likely to be much less than what O’Reilly may see. A share price over $200 is somewhat high, but calling it prohibitive for most investors feels like a stretch. As a reference, the average share price among S&P 500 constituents is around $222.
The consensus price target for IBKR shares among MarketBeat-tracked analysts is around $52, implying an upside of just over 2%.
Interactive Brokers has performed extremely well over the past three years, with a total return of around 271% as of the June 24 close. However, the company faces rising competition from firms like Robinhood Markets (NASDAQ: HOOD).
3. Pegasystems: 2-for-1 Barely Moves Needle; GenAI Blueprint Poised to Ignite
Mid-cap tech company Pegasystems (NASDAQ: PEGA) began trading at its post-stock split price on June 23 after performing a 2-for-1 stock split. Overall, this split doesn’t move the needle much, shifting the stock’s price from just over $100 to around $52 as of the June 24 close.
The MarketBeat average consensus price target on this name is only around $53, implying a nearly 3.5% upside.
However, this figure changes significantly when only considering the price targets that analysts updated after the company’s June 2 Investor Day. Analysts broadly raised their targets on the stock afterward as the firm highlighted the transformation of its business and shared further insight into its GenAI offerings.
Pegasystems has made big strides over the past eight years, growing its annual contracted revenues by over three times to $1.4 billion. It has greatly increased its free cash flow margins over that period, which now sit at over 42%.
Additionally, the firm’s GenAI Blueprint tool has the potential to be a game changer when it comes to how businesses implement AI to improve their operations. The company expects a wave of adoption for the product to come in the second half of 2025. This innovation, not the stock split, is a key reason why shares could go on a significant run.
And the Winner Is...
Among these three names, Pegasystems stands out for its significant upside potential going forward. If the GenAI Blueprint rollout goes well, the stock could receive an even more bullish re-rating. Reinforcing this outlook, tech analyst Dan Ives has named PEGA one of his 30 high-conviction picks in the newly launched Dan IVES Wedbush AI Revolution ETF (NYSEARCA: IVES), signaling strong institutional backing for its AI-driven potential.
However, investors shouldn't overlook O'Reilly Auto and Interactive Brokers as they are strong companies in their own right and could also perform well.