As previously reported, Wedbush analyst Taz Koujalgi initiated coverage of New Relic with a Neutral rating and $68 price target. The analyst notes the company has seen its growth momentum improve, and it has almost moved its entire installed base to a consumption-based pricing model. It is also pivoting towards margins, and is expected to show a material improvement in operating margins this year. The recent pricing changes should also be a tailwind to its topline, Koujalgi adds. However, the analyst believes the execution and momentum appear a bit uneven. This could be a function of the consumption-based revenue model which could lead to some bumpiness in the revenue line, says Koujalgi, who also worries about the competitive landscape with New Relic’s momentum lower than most of its peers in the observability space.
Published first on TheFly
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