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TD Cowen has adjusted its stance on DOMO (NASDAQ: DOMO), increasing the price target to $9.00 from the previous $8.00 while keeping a Hold rating on the stock.
The decision follows the company's recent financial performance, which revealed a revenue growth of -2%, slightly better than the -4% anticipated by the Street. Additionally, DOMO achieved an operating margin of 2.5%, surpassing the Street's expectation of -7%.
The firm has also provided its fiscal year 2025 guidance, which is reported to be slightly above the Street's projections. In a related corporate update, DOMO's Chief Financial Officer, David Jolley, is stepping down from his role due to health reasons.
The company is seeing positive developments in its consumption pricing model and partner channels, which are expected to contribute to its growth and margin improvement over time.
Despite these developments, TD Cowen maintains a Hold rating on the stock. The firm acknowledges the early promise shown by the company's pricing strategy and partner channel initiatives.
However, the analyst notes that these efforts will require time to significantly impact the company's growth and margins. As a result, the price target has been adjusted to reflect these considerations, setting it at a modest increase to $9.00.
The updated guidance for fiscal year 2025 and the recent financial results underscore the company's current position and its trajectory in the near term.
In other recent news, Domo (NASDAQ:DOMO) reported its Q2 FY2025 earnings, revealing a total revenue of $78.4 million, surpassing its revenue guidance, despite a slight 2% decrease year-on-year. Subscription revenue made up a substantial 90% of the total revenue, and the company's gross retention rate was reported at 88%.
The company also announced leadership transitions, with David Jolley moving into a senior advisor role and the appointment of Todd Crane as the new Chief Financial Officer.
These developments are part of Domo's recent activities, which also include strategic partnerships with cloud-based data warehouses (CDWs). These partnerships have been pivotal to Domo's business strategy, contributing to growth initiatives and fostering more strategic customer conversations.
In the wake of analyst notes, the company's focus on consumption-based pricing and partnerships with CDWs, including industry giants such as Google (NASDAQ:GOOGL), Oracle (NYSE:ORCL), and IBM (NYSE:IBM), is expected to drive future growth. Domo has set a goal to reach 50,000 users by the end of 2025 through these partnerships.
However, it's important to note that while Domo exceeded its revenue guidance, Q2 billings were slightly below the company's expectations. Moving forward, Domo plans to align costs with billings and revenue in the coming quarters to maintain financial health.
InvestingPro Insights
Following TD Cowen's updated analysis on DOMO (NASDAQ: DOMO), the InvestingPro platform provides a deeper dive into the company's financial health and market performance. With a notable gross profit margin of 75.72% for the last twelve months as of Q1 2025, DOMO demonstrates strong profitability on its sales, an important metric that could signal the efficiency of the company's pricing strategy and cost management. However, it's important to note that analysts have recently revised their earnings expectations downwards for the upcoming period, which may need to be considered alongside the positive aspects of the company's financials.
InvestingPro data also shows that DOMO's stock has experienced significant volatility, with a 20.06% return over the last three months, yet a 32.93% decline over the last six months. This could be indicative of the market's mixed reactions to the company's financial performance and strategic decisions. Additionally, the company's market capitalization stands at $294.71 million USD, reflecting its valuation in the current market context.
For investors looking for more comprehensive analysis, InvestingPro offers additional tips on DOMO, including insights into the company's short-term obligations versus liquid assets and expectations around profitability. There are a total of 9 InvestingPro Tips available for DOMO, which can be accessed for further detailed investment considerations.
As DOMO navigates through its fiscal year and corporate changes, these InvestingPro Insights can serve as valuable tools for investors to keep a close eye on the company's financial stability and market potential.
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