Lake Street lifts DOMO stock price target to $9 on improved outlook

On Thursday, Lake Street Capital Markets updated its assessment of DOMO (NASDAQ: DOMO), increasing the price target to $9.00 from the previous $8.50, while maintaining a Hold rating on the shares. According to InvestingPro data, DOMO’s stock has shown strong momentum recently, trading at $10.69 and delivering a notable 20.76% return year-to-date. The company’s current market capitalization stands at $411 million. The adjustment follows DOMO’s first-quarter billings report, which, at $63.9 million, showed a 2.4% decline but still outperformed the anticipated 4.6% decrease.

The company attributed its better-than-expected performance to two main factors. Firstly, DOMO highlighted an improvement in sales force productivity compared to the first quarter of 2025, crediting a more seasoned team that has adapted to the consumption-based sales model. Secondly, the company reported a gross Annual Contract Value (ACV) retention rate of 86%, which is one percentage point above expectations, indicating fewer non-renewals from the existing customer base.

DOMO’s shift towards consumption-based pricing continues to evolve, with over 70% of its Annual Recurring Revenue (ARR) now generated from this model. The company anticipates this will rise to nearly 90% by the end of the year. DOMO is leveraging this shift by timing its "let’s go consumption" approach with the renewal cycle for seat-based licenses, allowing customers to easily explore new offerings such as Agent Catalyst, DOMO’s AI-powered toolkit.

Looking ahead, DOMO has expressed confidence in its growth trajectory, forecasting a 5% increase in fourth-quarter billings for 2026 and a 10% rise for the same period in 2027. While analysts expect improvements, InvestingPro data shows the company’s current financial health score is fair, with a revenue CAGR of 13% over the past five years. Investors seeking deeper insights into DOMO’s growth potential and comprehensive analysis can access additional ProTips and detailed metrics through InvestingPro’s extensive research platform. This optimism is based on a combination of factors, including the acquisition of new logos through a more effective channel strategy and the expectation that gross ACV retention will continue to improve, potentially reaching beyond 90%.

In light of these developments, Lake Street Capital Markets has revised its financial projections for DOMO, expecting higher revenue and earnings per share (EPS) for fiscal year 2026. The firm anticipates low single-digit billings growth in the second half of the year, as opposed to a flat performance in the first half, which underpins the decision to raise the price target to $9.00.

In other recent news, Domo Inc (NASDAQ:DOMO). reported its first-quarter fiscal year 2026 results, which exceeded analysts’ expectations with a revenue of $80.1 million, surpassing the anticipated $77.9 million. The company achieved a non-GAAP EPS of ($0.09), beating the consensus estimate of ($0.20). This performance marks a notable improvement from the previous quarter’s decline. Cantor Fitzgerald analyst Yi Fu Lee raised the price target for Domo to $12, citing strong financial performance and strategic partnerships contributing to revenue growth. DA Davidson also increased its price target to $9, following Domo’s impressive first-quarter results and upward revision of full-year guidance for both revenue and earnings.

Citizens JMP maintained a $16 price target, expressing optimism about Domo’s financial results. The company’s subscription revenue, a key metric, was reported at $71.4 million, slightly above the consensus, though down 1% from the previous year. Domo’s transition to a consumption-based pricing model has significantly boosted sales productivity by over 60%, enhancing the company’s financial outlook. The company’s strategic initiatives, including AI-driven workflow automation and improved cloud data integrations, have resonated well in the market. Analysts and investors are closely watching Domo’s upcoming presentations at technology conferences for further insights into its strategies and financial health.

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