TD Cowen raised its price target on PagerDuty Inc. to $13.50 from $10.00 on Wednesday, maintaining a Buy rating as the company’s shift to a usage-based revenue model gains traction.
The new target implies roughly eight times enterprise value to fiscal 2027 free cash flow, reflecting higher sector multiples applied to PagerDuty’s expanding recurring revenue streams. The stock has gained 82% over the past six months, outpacing the 49% advance in the EMCLOUD index, though it remains down 6% year-to-date versus a 14% gain for the benchmark.
PagerDuty’s gross profit margin held steady at 85% last quarter, according to InvestingPro data, which rates the company’s financial health as strong. Usage-based contracts accounted for 10% of annual recurring revenue in the latest reported period, a figure TD Cowen highlighted as evidence of progress in its go-to-market strategy.
Morgan Stanley took a contrasting view, downgrading PagerDuty to Underweight from Equalweight and cutting its price target to $9.00. The firm cited concerns over competitive pressures, potential disruption from artificial intelligence, and the need to adapt PagerDuty’s pricing model to evolving customer demands.
PagerDuty is scheduled to report earnings on August 27, with TD Cowen anticipating a modest beat. The company has also made leadership changes, appointing Eric Prengel as Chief Financial Officer following the retirement of the prior finance chief. Arnaud Lagarde was named Vice President for the EMEA region, while Alex Shootman, CEO of Alkami Technology, joined PagerDuty’s Board of Directors.
In distribution news, PagerDuty named Ingram Micro as its exclusive distributor in Australia to strengthen its channel reach in the region.
