PagerDuty’s Growth Uncertainty and Market Challenges Justify Hold Rating

Monness analyst Brian White has maintained their neutral stance on PD stock, giving a Hold rating today.

Brian White has given his Hold rating due to a combination of factors affecting PagerDuty’s current market position. The company has encountered a slowdown in revenue growth, marking its lowest annual growth rate historically, which raises concerns about its ability to regain momentum in the near term. Although there is a significant opportunity in the real-time digital operations market, the transition of their software and the challenging macroeconomic environment add layers of uncertainty.
Despite these challenges, PagerDuty’s financial projections for the upcoming quarters show a modest increase in revenue and earnings per share, suggesting some stability. However, the company’s recent struggles with market execution and the unpredictable impact of AI initiatives have made it difficult to forecast a clear path to accelerated growth. As a result, while there is potential for improvement in the latter half of the fiscal year, the risks associated with these transitions and the uncertain timing of growth acceleration justify a Hold rating.

In another report released today, TD Cowen also maintained a Hold rating on the stock with a $18.00 price target.