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On Friday, DA Davidson initiated coverage on shares of DOMO (NASDAQ:DOMO), assigning a Neutral rating to the stock and setting a price target of $8.00. This new target reflects a decrease from the previous price target of $9.00. Currently trading at $7.05, DOMO has seen its stock decline over 37% in the past year. The firm’s analysts noted a deceleration in the company’s total revenue and a full-year guidance suggesting declining growth as the primary reasons for the adjustment. According to InvestingPro data, three analysts have recently revised their earnings estimates upward for the upcoming period, suggesting mixed sentiment among Wall Street experts.
The firm acknowledged a few positive aspects from DOMO’s earnings report, including improved EBIT profitability and subscription Remaining Performance Obligations (RPO). While the company maintains a strong gross profit margin of 75%, InvestingPro analysis indicates an overall weak financial health score, with short-term obligations exceeding liquid assets. Despite these improvements, the overall assessment led to the lowered expectation for the stock’s performance.
DOMO’s recent earnings have indicated a slowdown in revenue growth, which has become a concern for DA Davidson. With revenue growth of just 1% in the last twelve months and a negative forecast for fiscal year 2025, the analysts emphasized that while the company has made strides in profitability, the core issue of slowing revenue is significant enough to warrant a cautious stance on the stock.
The adjustment in the price target from $9 to $8 by DA Davidson comes after a detailed analysis of DOMO’s financial results. The analysts pointed out that although there are bright spots, such as the improved EBIT profitability and subscription RPO, the forecast for declining growth influenced their decision to lower the price target.
In summary, DA Davidson’s initiation of coverage on DOMO with a Neutral rating and a reduced price target to $8 is based on the observed deceleration in revenue and the company’s guidance, which anticipates continued declining growth. The firm does recognize the company’s progress in profitability and the strength of its subscription RPO.
In other recent news, Domo Inc . reported its fourth-quarter fiscal year 2025 results, surpassing earnings expectations with a non-GAAP EPS of -$0.05, compared to the forecasted -$0.16. The company also exceeded revenue projections, reporting $78.8 million against the anticipated $78.0 million. Domo’s subscription revenue was $71.9 million, aligning with expectations and showing flat year-over-year growth. Billings were reported at $102.6 million, slightly above the consensus of $101.2 million. Notably, the company achieved its highest adjusted free cash flow in history, amounting to $6 million. JMP Securities maintained its Market Outperform rating for Domo, with a price target of $16, following these positive earnings results. The company also highlighted significant growth in its long-term subscription Remaining Performance Obligations (RPO), which increased by 38%, and current RPO for subscriptions, which grew by 14%. These developments reflect Domo’s strategic shift towards a consumption-based pricing model and increased investment in AI services.
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