Cautious Outlook for PagerDuty Amidst Competitive Challenges and Decelerating Growth

Andrew Sherman, an analyst from TD Cowen, reiterated the Hold rating on PagerDuty (PD – Research Report). The associated price target was lowered to $18.00.

Andrew Sherman has given his Hold rating due to a combination of factors influencing PagerDuty’s current market position. The company is expected to report revenue growth in line with its guidance, but the growth rate has slightly decelerated compared to previous quarters. Although there is a potential for PagerDuty to gain market share from Opsgenie, the presence of new competitors like Datadog’s On Call product and emerging startups poses a challenge.
Despite encouraging signs such as strong performance from newer products and growth in the enterprise segment, the overall sales headcount has declined, which may impact growth acceleration. The company’s valuation appears inexpensive; however, the limited upside to multiples suggests that significant growth reacceleration is needed to improve its market standing. Therefore, the Hold rating reflects a cautious outlook, with a price target adjustment to $18.