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Investing.com - Canaccord Genuity reduced its price target on PagerDuty (NYSE:PD) to $19.00 from $21.00 on Thursday, while maintaining a Buy rating on the stock. The company, which currently trades at $15.59, has seen its shares decline nearly 8% over the past week.
The firm cited expectations for a potential growth inflection in fiscal year 2027, contingent on small and medium-sized business growth consistently improving and large enterprises continuing to elevate PagerDuty’s strategic position in internal IT operations. According to InvestingPro data, the company maintains impressive gross profit margins of 83.3% and analysts expect positive net income growth this year.
Canaccord highlighted improving profit performance as an "enduring silver lining" in recent quarters, noting that PagerDuty could reasonably achieve 25% operating margins on an annual basis within the next three years.
The current valuation of approximately 2x calendar year 2026 estimated sales and 11x calendar year 2026 estimated free cash flow provides "a very forgiving cushion in valuation as traction improves," according to the research firm.
The new $19 price target reflects an enterprise value to calendar year 2026 estimated revenue multiple of approximately 3x, down from the previous 3.5x multiple for calendar year 2025, and 14x free cash flow.
In other recent news, PagerDuty Inc. reported its earnings for the second quarter of fiscal year 2026, exceeding analysts’ expectations with earnings per share (EPS) of $0.30, surpassing the forecasted $0.20. However, the company’s revenue came in at $123 million, slightly below the anticipated $123.65 million. Despite the earnings beat, the revenue miss was noted by investors. These developments highlight the company’s recent performance in the financial market. The earnings announcement is a crucial factor for investors assessing the company’s financial health. Analysts had projected different figures, and the results provide insight into how the company is performing against these expectations.
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