PagerDuty's Market Leadership Will Help It Sustain 20% Growth Amid Macro Headwinds, Analyst Says

Morgan Stanley analyst Sanjit Singh upgraded PagerDuty Inc PD from Equal-Weight to Overweight and raised the price target from $32 to $36.
While expecting the vast majority of MS's software coverage to see slower growth in 2023, the analyst thinks PagerDuty's leadership in digital operations management should help the company sustain at least 20% growth, expand margins and generate FCF, despite the onset of a more challenging budget environment.
For operations, devops, and site reliability engineering (SRE) teams, PagerDuty is essential in automating the IT workflows required to respond to service incidents in real-time.
PagerDuty's status as a solution to unlock productivity from expensive engineering teams will likely increase during the current tech downturn and shield it from IT budget cuts.
PagerDuty's highly ratable subscription revenue provides greater visibility and less volatility than many of its consumption-based peers in infrastructure software.
A track record of solid ROI and a short payback period positions the company well to close new business in FY24 in what is likely to be a complex spending environment.
The 90% gross retention and 80% revenue exposure to the mid-market and enterprise should allow PagerDuty to weather the coming storm better.
PagerDuty's solid traction in new products, according to channel checks and management commentary, updated Process Automation, and Event Intelligence capabilities, speaks to a more comprehensive AIOps platform and provides continued expansion opportunities in the future.
PagerDuty is a share gainer in ample and lightly penetrated opportunities.
Price Action: PD shares traded higher by 4.85% at $27.66 on the last check Friday.

Market News and Data brought to you by Benzinga APIs

Get Our Top Trade Ideas Delivered Daily - 65% Off Now'

-

-

-

-

-

-

-

Get Our Top Trade Ideas Delivered Daily - 65% Off Now'

-

-

-

-

-

-

-

Comments

Analyst Calendar