Craig-Hallum cuts PagerDuty to Hold as growth expectations continue to deflate

As previously reported, Craig-Hallum downgraded PagerDuty (PD) to Hold from Buy with a price target of $15, down from $20. The firm notes the company was in line on revenue and again well ahead on EPS, with forward revenue pulled in, but EPS raised. Further, Craig-Hallum says great cost controls should not be overlooked and have bought the company much greater patience than it otherwise would have exhibited in the wait for improved sales execution, customer retention, and overall revenue growth/acceleration. While shares are seemingly inexpensive, the firm believes growth expectations continue to deflate and the top line is now down to 1% year-over-year in Q4, threatening to go negative. While difficult to put a precise finger on it, there clearly appears to be a fundamental change in end markets in ways detrimental to the standing of PagerDuty, Craig-Hallum adds.