Analyst Andrew Sherman of TD Cowen maintained a Buy rating on PagerDuty, reducing the price target to $20.00.
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Andrew Sherman has given his Buy rating due to a combination of factors that highlight both challenges and opportunities for PagerDuty. Despite experiencing seat pressures that have affected net revenue retention, the company has shown resilience with strong new and expansion bookings. The management’s optimism about transitioning to a usage-based pricing model is seen as a strategic move that could eventually lead to higher growth rates, as it aligns with the interests of early adopters and reduces the impact of seat-based downgrades.
Additionally, the expansion of a significant AI-native customer underscores the potential for growth in this sector, as the customer’s engineering footprint has rapidly expanded to support a global platform. Although the price target has been adjusted to $20, reflecting near-term challenges, the valuation remains attractive at current levels. Sherman’s analysis suggests that the shift to a usage-based model and the company’s positioning in the AI space could drive future growth, making PagerDuty a compelling acquisition candidate.
According to TipRanks, Sherman is a 4-star analyst with an average return of 8.6% and a 51.90% success rate. Sherman covers the Technology sector, focusing on stocks such as Elastic, Dynatrace, and JFrog.
In another report released on November 19, Truist Financial also maintained a Buy rating on the stock with a $20.00 price target.