PagerDuty (PD) Stock Forecast & Price Target

PagerDuty Inc. has demonstrated positive momentum, with new and expansion bookings increasing over 15% quarter-over-quarter, alongside a 25% year-over-year rise in platform usage, reflecting strong demand for its digital operations management solutions. The company has achieved its first GAAP profitable quarter, supported by significant improvements in operating margins, which expanded by 800 basis points year-over-year. Additionally, the growth in paid customers to 15,247 and a favorable CFO performance, exceeding consensus expectations at $116 million, underline the company's robust financial health and potential for continued success in a competitive market.

PagerDuty's stock outlook appears negative due to a projected decline in revenue growth, with estimates for calendar years 2025-2026 being 250 basis points lower than previous expectations, influenced by a potential fall in technology spending, challenges in acquiring new customers, and reduced renewal and expansion rates. The company's trailing twelve months (TTM) billings growth of 6%, which did not meet internal expectations and was below the consensus forecast of 7.1%, raises concerns about its ability to maintain strong revenue performance. Furthermore, a less favorable growth and margin profile may contribute to a decrease in the company's valuation multiple, reinforcing a pessimistic outlook for its stock.