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PagerDuty Surges on Third-Quarter Earnings Beat, Analyst Praise

Analysts raise their price targets on PagerDuty following 'solid' third-quarter results.
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PagerDuty  (PD) - Get PagerDuty, Inc. Report was surging Friday after the digital operations company posted better-than-expected third-quarter results and analysts responded by raising their price targets.

Shares of the San Francisco-based company were jumping nearly 22.8% to $39.74 in trading Friday.

PagerDuty reported a non-GAAP net loss of $6.9 million, or 9 cents a share, compared with a loss of $7.9 million, or 10 cents a share, a year ago. Revenue increased 26% to $54 million. The company also raised its guidance.

Analysts polled by FactSet were calling for a loss of 10 cents a share on revenue of $52.6 million.

"We believe PagerDuty is positioned well to continue to ride the wave of agile development as it continues to grow within the DevOps community, and net retention rates show the power of the platform’s viral adoption," said J.P. Morgan analyst Sterling Auty, who raised his price target to $45 from $31 a share.

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The self-service channel, Auty said "continues to drive new customer additions, but now with the investments in the mid-market and enterprise sales forces, the 'land' portion of the 'land and expand' growth equation is set to become more of the mix as new deals are struck at larger price points."

Truist analyst Joel Fishbein raised his price target on PagerDuty to $30 from $20, while keeping a hold rating on the shares, the Fly reported.

The company's third-quarter results were "solid all around" and its guidance reflects management's confidence in the "go to market motion" in spite of the uncertain backdrop, Fishbein said, though he warned that he continues to lack visibility on when new products will lead to an acceleration in revenue.

DA Davidson analyst Rishi Jaluria raised his price target on PagerDuty to $38 from $26, while keeping a neutral rating on the shares. He noted that the company reported a "solid" third quarter and the commentary on its earnings call was positive.

Jaluria said he remained positive on the stock, but added that PagerDuty is "fairly valued" at enterprise value 13-times expected 2021 revenue.