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PagerDuty stock (
$NYSE:PD) fell on Friday after investment firm Monness, Crespi, Hardt downgraded the company, citing the “strong rebound” in the stock from the lows seen in May. Analyst Brian White lowered his rating on PagerDuty to neutral, noting that while the last several months have been “especially painful” for next-generation software companies, PagerDuty has seen strength, but there is concern that this will “fizzle out in due time.” PagerDuty is scheduled to report second-quarter results on September 1 and Monness, Crespi, Hardt believes the company will generate 32% growth for $88.1M in revenues and lose an adjusted 8 cents per share.
However, there is concern that billings growth could slow, with PagerDuty expecting growth between 25% and 30%. It is not yet clear how the downgrade will affect PagerDuty’s market and earnings in the long term.
However, the company’s strong rebound from May lows indicates that it has strong support from investors.
Market Reaction
On Friday, PagerDuty stock opened at $27.3 and closed at $28.6, up 1.9% from the prior closing price of $28.1. Despite this strong rebound, analysts have downgraded the stock, citing concerns about the company’s long-term prospects. While PagerDuty has seen strong growth in recent years, some worry that it is not sustainable, and that the company will eventually struggle to compete against larger rivals.
VI Analysis
Company’s fundamentals reflect its long term potential, below analysis on PAGERDUTY are made simple by VI app. The intrinsic value of PAGERDUTY share is around $41.7, calculated by VI
Line. Now PAGERDUTY stock is traded at $28.6, undervalued by 32%. This means that the stock has potential to increase by 32% in order to meet its intrinsic value.
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Summary
PagerDuty Inc (PAGERDUTY) shares fell on Thursday after an analyst at Evercore ISI downgraded the stock, saying the strong rebound in the share price following the company’s better-than-expected earnings last week has left it “fully valued”. “the shares are fairly valued at current levels, and while we see potential for further multiple expansion, we would need to see a material step-up in billings growth to drive sustained outperformance,” Materne wrote in a note to clients. PagerDuty reported fourth-quarter billings growth of 42%, well above the 32% growth analysts were expecting, according to FactSet. Materne said the strong billings growth was driven by an increase in enterprise customers, which tend to have higher contract values than smaller customers. PagerDuty is scheduled to report first-quarter results on May.
