DA Davidson adjusted its outlook on DOMO (NASDAQ: DOMO), a cloud software company, by increasing the price target to $8.00 from the previous $7.00 while maintaining a Neutral rating on the stock. This change follows the company's release of its second-quarter financial results for fiscal year 2025, which surpassed expectations.
The company's performance in the second quarter was highlighted by a beat on both the top and bottom lines. This positive outcome led to the revised price target. Despite the strong quarter, DA Davidson remains cautious regarding DOMO's position in the competitive business intelligence and analytics market.
According to the firm, DOMO's management expressed optimism about the company's potential in the evolving data and AI landscape. This optimism is partly due to the development of their partner relationships with Cloud Data Warehouses (CDWs) such as Snowflake (NYSE:SNOW) and Databricks. These partnerships are seen as critical as the company seeks to grow and adapt within the industry.
However, the firm's analyst noted potential challenges for DOMO, particularly in its competitive positioning within the business intelligence and analytics layer. The analyst pointed out that as broader cloud data platforms expand into the top of the data stack, it could impact DOMO's market stance.
In summary, while the price target adjustment reflects a positive view of DOMO's recent performance and future opportunities, DA Davidson's neutral stance indicates a level of reservation about the company's ability to navigate the competitive landscape effectively.
Domo (NASDAQ:DOMO), Inc. reported its Q2 FY2025 earnings, achieving a total revenue of $78.4 million, exceeding its guidance despite a slight 2% decrease year-on-year.
This revenue was largely driven by subscription revenue, which constituted 90% of the total. TD Cowen, following these results, adjusted its stance on Domo, raising the price target to $9.00 from the previous $8.00 while maintaining a Hold rating.
In leadership transitions, David Jolley has stepped down from his position as Chief Financial Officer due to health reasons, with Todd Crane (NYSE:CR) assuming the role. Additionally, Domo's strategic partnerships with cloud-based data warehouses, including Google (NASDAQ:GOOGL), Oracle (NYSE:ORCL), and IBM (NYSE:IBM), have been integral to its business strategy, fostering growth and strategic customer conversations.
The company's aim to reach 50,000 users by the end of 2025 through these partnerships reflects its commitment to growth.
InvestingPro Insights
In light of DA Davidson's updated outlook on DOMO, it's worth considering additional insights from InvestingPro. The company's impressive gross profit margin is a key highlight, with the last twelve months as of Q1 2023 showing a robust 75.72%. This financial health indicator aligns with the positive second-quarter results that exceeded expectations and may underpin the optimism about DOMO's potential in the data and AI space.
However, analysts have flagged concerns that need to be on investors' radar. Notably, five analysts have revised their earnings downwards for the upcoming period, signaling caution. This aligns with DA Davidson's neutral stance, as it reflects the broader market sentiment and potential headwinds facing the company. Additionally, with a market capitalization of $305.4 million and a negative price-to-earnings ratio over the last twelve months, it is clear that the market is still awaiting DOMO's turn to profitability. The company's stock has been volatile, with a significant hit over the last six months, although it has had a strong return over the last three months.
For those looking for more detailed analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/DOMO, which can provide deeper insights into DOMO's financials and market position.
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