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Friday - Canaccord Genuity has adjusted its price target for PagerDuty (NYSE:PD) stock, reducing it to $23 from the previous $24, while continuing to endorse the stock with a Buy rating. Currently trading at $15.61, near its 52-week low of $15.49, InvestingPro analysis suggests the stock is undervalued relative to its Fair Value. The firm’s analyst, Kingsley Crane, has provided insights into the company’s future, focusing on the potential for growth in the fiscal year 2026. Crane predicts that if growth among small and medium-sized businesses (SMBs) can consistently increase and large enterprises keep prioritizing PagerDuty within their IT operations, the company will see a surge in growth.
PagerDuty’s recent quarters have shown an improvement in profit performance, which Crane highlights as a positive trend. The company maintains impressive gross profit margins of 82.53%, according to InvestingPro data. The analyst anticipates that PagerDuty could achieve 25% operating margins on an annualized basis within the next three years. This expectation is based on the company’s current progress and financial health.
The valuation of PagerDuty’s stock is also a point of discussion in Crane’s analysis. With the stock currently valued near 2.5 times the calendar year 2025 estimated (CY25E) sales and 12 times CY25E free cash flow (FCF), the analyst believes the valuation offers a "very forgiving cushion" as the company gains traction. This view aligns with broader analyst sentiment, with targets ranging from $18 to $26, while InvestingPro research reveals 12 additional key insights about PagerDuty’s valuation and growth potential in their comprehensive Pro Research Report. This perspective suggests confidence in PagerDuty’s ability to grow and become more profitable over time.
Canaccord’s revised price target of $23 reflects a roughly 4 times enterprise value to CY25E revenue multiple and 19 times FCF. This adjustment takes into account the company’s potential for increased growth and improved profit margins, while also considering the current market conditions and valuation metrics.
The maintenance of a Buy rating despite the slight decrease in price target indicates that Canaccord Genuity remains optimistic about PagerDuty’s prospects. The firm’s outlook is based on the company’s strategic position, financial performance, and market valuation, suggesting a positive view for the future of PagerDuty’s stock. With revenue growing at 8.71% and analysts predicting profitability this year, investors seeking deeper insights can access PagerDuty’s complete financial health analysis and Fair Value calculations through InvestingPro’s detailed research tools and advanced stock screener.
In other recent news, PagerDuty Inc. reported impressive fourth-quarter 2025 earnings, exceeding analysts’ expectations. The company achieved an earnings per share (EPS) of $0.22, surpassing the projected $0.16, and reported revenue of $121.4 million, which also topped the anticipated $119.69 million. PagerDuty’s revenue grew 9% year-over-year, and the annual recurring revenue (ARR) increased to $494 million, marking a similar growth rate. The company maintained a strong financial position with a non-GAAP operating margin of 18% and an expanded free cash flow margin of 23%.
Additionally, PagerDuty introduced new AI products and restructured its sales team to focus on enterprise sales and digital operations modernization. The company provided a revenue guidance range of $500-$507 million for fiscal year 2026, indicating a growth expectation of 7-8%. Analysts from firms such as Bank of America and Morgan Stanley (NYSE:MS) discussed the company’s strategic initiatives and sales transformation, highlighting the importance of multi-product platform partnerships.
PagerDuty’s leadership changes and strategic focus on AI and automation were also emphasized as key drivers for future growth. The company remains committed to enhancing its platform capabilities and expanding its customer base, particularly in the enterprise segment.
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