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Investing.com - TD Cowen upgraded PagerDuty (NYSE:PD) from Hold to Buy and raised its price target to $22.00 from $17.00, citing the high likelihood of an acquisition following a Reuters report. The company, currently valued at $1.45 billion, boasts impressive gross profit margins of 83.33% and maintains a healthy balance sheet with a current ratio of 2.02.
The upgrade comes after a Friday Reuters article indicated potential acquisition interest in the digital operations management platform provider, prompting TD Cowen to reassess its outlook on the stock. According to InvestingPro data, PagerDuty has demonstrated solid revenue growth of 8.55% over the last twelve months.
TD Cowen noted that Qatalyst Partners, which is reportedly working with PagerDuty, has a strong track record of facilitating software mergers and acquisitions, with many similar situations resulting in sales over the years.
The firm highlighted PagerDuty’s current valuation of approximately 2.5x enterprise value to calendar year 2026 estimated sales, suggesting room for appreciation.
TD Cowen identified a reasonable acquisition valuation range of 3-4x enterprise value to calendar year 2026 estimated sales, which would translate to approximately $19.00-$24.50 per share, representing what the firm describes as a compelling risk/reward profile.
In other recent news, PagerDuty Inc. has been exploring strategic options, including a potential sale, following acquisition interest from undisclosed parties. The company has engaged investment bank Qatalyst Partners to evaluate these options, though the process is still in its early stages. In another development, PagerDuty held its 2025 annual meeting where shareholders elected three directors and approved proposals, with significant votes cast for each candidate. Analysts have provided mixed insights on PagerDuty’s stock, with RBC Capital maintaining an Outperform rating, citing confidence in the company’s platform opportunities despite some execution issues. Canaccord Genuity lowered its price target to $21 but kept a Buy rating, noting positive profitability trends and potential growth in fiscal year 2026. Meanwhile, TD Cowen adjusted its price target to $17, maintaining a Hold rating, after PagerDuty’s first-quarter revenue hit the high end of its guidance. Despite some challenges with annual recurring revenue and billings, PagerDuty’s total customer count increased by 1% year-over-year, marking the highest growth since the second quarter of 2023.
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