PD Stock Price: $45 Target By JPMorgan

By Amit Chowdhry ● December 5, 2020
  • The stock price of Pagerduty Inc (NYSE: PD) has received a price target increase from $31 to $45 by JPMorgan. These are the details.

The stock price of Pagerduty Inc (NYSE: PD) has received a price target increase from $31 to $45 by JPMorgan. And JPMorgan analyst Sterling Auty is also keeping an “Overweight” rating on the company’s shares due to the results of the third quarter of fiscal 2021, which ended October 31, 2020.

Auty cited PagerDuty’s net dollar retention moving higher for the first time since the company went public. Plus Auty had noticed a more positive tone from the company’s management about business fundamentals.

PagerDuty had reported third-quarter revenue increased by 25.8% year-over-year to $53.8 million. And now over 13,500 customers are using PagerDuty for powering their digital transformations. Plus the company also reported customers with annual recurring revenue of over $500,000 is up 40% year-over-year.

“We are proud of our third-quarter results, which exceeded both our guidance and consensus, as we hit an important inflection point, with our key leading indicators trending positively,” said PagerDuty CEO Jennifer Tejada. “Our digital operations plan accounted for nearly three-quarters of our net new ARR illustrative of our successful shift from point solutions to the growing importance of our platform as critical infrastructure for our customer’s digital transformation. I am grateful to our team, our customers and our users, and energized by the bright future ahead of us.”

The GAAP operating loss was $21.8 million (or GAAP operating margin of negative 40.6%), compared to a $16.7 million GAAP operating loss (or GAAP operating margin of negative 39%) in the third quarter of fiscal 2020. And non-GAAP operating loss was $6.3 million (or non-GAAP operating margin of negative 11.7%), compared to a $9.3 million non-GAAP operating loss (or non-GAAP operating margin of negative 21.9%) in the third quarter of fiscal 2020.

The net cash provided by operations was $4.8 million, or 9% of revenue, compared to $3.4 million (or 8.0% of revenue) in the third quarter of fiscal 2020. And free cash flow was $4.5 million (or 8.4% of revenue), compared to $2.3 million (or 5.3% of revenue) in the third quarter of fiscal 2020.

PagerDuty had reported its seventh consecutive quarter in which approximately a third of its enterprise customers expanded, including Discovery Communications, DocuSign, Yahoo Japan, Salesforce and Vanguard. PagerDuty’s free plan — which was formally introduced in the quarter — has been gaining traction and the number of companies benefiting from the PagerDuty platform, both paid and free — grew by 18%.

For the third quarter of fiscal 2021, along with Rundeck, PagerDuty reached over 500 partner ecosystem integrations — many of which were built by partners like CloudFlare, GitHub, Puppet, and Zoom. And PagerDuty also had a record quarter for channel partner sell-through and formed a global strategic alliance with Tata Consultancy Services, one of the top five global systems integrators.

For Q4 2021, PagerDuty currently expects total revenue of $57 million to $58 million — representing a growth rate of 24% – 26% year-over-year and non-GAAP net loss per share of $0.12 – $0.11 assuming approximately 82 million shares. For the full fiscal year 2021, PagerDuty currently expects total revenue of $211 million – $212 million — representing a growth rate of 27% year-over-year. And non-GAAP net loss per share of $0.30 – $0.29 assuming approximately 80 million shares.

Disclosure: I have a small PD position in my stock portfolio.