RBC Capital has adjusted its outlook on PagerDuty (NYSE: NYSE:PD), reducing the stock's price target to $22.00 from the previous $27.00 while sustaining an Outperform rating.
The firm's decision follows PagerDuty's announcement of mixed financial results, which included a third consecutive quarter of 10% growth in Annual Recurring Revenue (ARR).
Despite this growth, the company has revised its FY/25 revenue guidance downward, attributing the change to delays in closing enterprise deals and the subsequent effect on one-time professional services revenue.
PagerDuty has indicated that these challenges are timing issues, and it expects to see an acceleration in ARR and Dollar-Based Net Retention Rate (DBNRR) in the second half of the year. Management remains confident in the company's strategic direction, focusing on expanding its presence in the enterprise market.
RBC Capital's revised price target reflects the lowered revenue estimates and the firm's anticipation of PagerDuty's performance as it concentrates on its enterprise customer segment. Despite the near-term headwinds, the Outperform rating indicates that RBC Capital still sees potential in PagerDuty's stock.
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