Domo’s Growth Potential Limited by Slow Progress in Strategic Initiatives: Hold Rating Maintained

In a report released yesterday, Derrick Wood from TD Cowen maintained a Hold rating on Domo (DOMO – Research Report), with a price target of $9.00.

Derrick Wood has given his Hold rating due to a combination of factors impacting Domo’s current and future performance. While there are emerging benefits from new go-to-market initiatives, these are progressing at a measured pace, and more time is needed for these efforts to significantly improve the company’s growth trajectory. The recent increase in sales headcount is a positive sign, indicating potential for future growth, but the overall year-over-year sales headcount is still down, suggesting challenges remain.
Domo’s recent financial performance shows some positive trends, such as better-than-expected revenue growth and operating margins, and stable customer retention rates. However, the company is still in the process of shifting to a consumption-based pricing model and expanding its partner channel relationships, which are crucial for future growth. Given these factors, Wood believes that while there is room for modest upside, the stock is likely to remain range-bound until these new growth initiatives gain more traction. Thus, a Hold rating is maintained with a price target of $9.