TD Cowen has maintained a Hold rating on PagerDuty (NYSE: NYSE:PD), with a consistent price target of $23.00 as the firm anticipates PagerDuty's second-quarter revenue growth to hit the higher end of its guidance at 9%, with third-quarter projections expected to align with their estimate of 11% growth.
The assessment follows management meetings that took place in July, where a variety of topics were discussed.
PagerDuty, set to report its earnings on September 2, is being observed closely by TD Cowen, especially as the company approaches its second and third-quarter financial disclosures. The firm's analysis suggests that while the company's valuations are deemed inexpensive, trading at approximately 3.5 times enterprise value to calendar year 2025 estimated sales and around 20 times enterprise value to free cash flow, growth expectations remain tempered.
The financial institution hosted meetings with PagerDuty's management in July, which provided insights into the company's operational and financial strategies.
In other recent news, PagerDuty has demonstrated financial discipline and performance by maintaining long-term debt repayment and allocating free cash flow to shareholders. This led RBC Capital to raise its price target for the company following strong 2Q24 results.
The company's earnings before interest, taxes, depreciation, amortization, and stock-based compensation (EBITDAS) estimates for the fiscal years 2024 and 2025 have also been revised by the analyst.
In addition, PagerDuty has integrated its Operations Cloud with Snowflake (NYSE:SNOW) Trail, aiming to improve operational efficiency and resilience. This collaboration allows developers to connect with various observability and alert platforms, enhancing data operations and infrastructure management.
Several analyst firms have provided their perspectives on PagerDuty. Goldman Sachs (NYSE:GS) initiated coverage with a Neutral rating, expressing caution due to several factors including the potential for increased competition.
TD Cowen maintained a Hold rating, noting that the company's fourth-quarter revenue was slightly below expectations, but billings exceeded estimates. JPMorgan (NYSE:JPM) also started with a Neutral rating, acknowledging PagerDuty's leadership in Incident Management and Response but expressing caution due to the rapidly changing competitive landscape.
InvestingPro Insights
PagerDuty's financial health and growth trajectory are of keen interest to investors as the company nears its earnings report. According to recent data from InvestingPro, PagerDuty has a market capitalization of $1.93 billion, with a notable gross profit margin of 81.97% over the last twelve months as of Q1 2025. This high gross profit margin underscores the company's ability to maintain profitability on its core services and products.
InvestingPro Tips highlight that PagerDuty is expected to become profitable this year, with four analysts having revised their earnings upwards for the upcoming period. This aligns with TD Cowen's anticipation of revenue growth hitting the higher end of guidance. Additionally, the company's strong liquidity position is reflected in its cash reserves, which exceed its debt, and its liquid assets surpassing short-term obligations. Such financial stability may reassure investors looking for a resilient pick in uncertain markets.
For those seeking a deeper analysis, InvestingPro offers additional tips that can provide more nuanced insights into PagerDuty's stock potential. These tips are part of a broader set of data points available through the InvestingPro platform, which includes detailed metrics and forecasts to aid in investment decisions.
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