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PagerDuty Declines 16% YTD: Should You Buy the Stock on the Dip?
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PagerDuty (PD - Free Report) shares have plunged 15.7% in the year-to-date period against the Zacks Internet - Software industry’s rise of 38.3% and the broader Zacks Computer & Technology sector’s return of 35.5%.
PD has underperformed its peers, such as Atlassian (TEAM - Free Report) , which offers similar digital operations management solutions. TEAM shares gained 13.5% over the same time frame.
The underperformance can be attributed to ongoing weakness in the Small and Medium-sized Business segment and a challenging macroeconomic environment impacting the Enterprise segment, leading to longer sales cycles.
Despite these challenges, PD is benefiting from an expanding customer base and increased adoption of its Operations Cloud, including AIOps and automation capabilities.
PD has seen a rise in high-value customers, with the number spending more than $100,000 in Annual Recurring Revenue (ARR) and increasing to 825 in the third quarter of 2024, a 6% rise compared with the last year. This highlights the growing adoption and expansion of PagerDuty’s solutions among large-scale customers.
PagerDuty Sees Growth With AI-Driven Automation Solutions
Growing demand for automation and generative AI has been a major growth driver for Pager Duty.
In response to this demand in the third quarter of 2024, PD introduced AI-driven solutions, such as PagerDuty Advance, which integrates generative AI to improve incident management and reduce response times. This innovation has attracted more customers seeking to automate and optimize its IT operations.
Increased demand for automated and intelligent incident management solutions has been noteworthy. In October, PagerDuty announced innovations for its Operations Cloud, enhancing AI-driven automation and machine learning to help organizations improve operational resilience, reduce downtime and mitigate the risk of outages.
The company’s AIOps and Automation capabilities have been key contributors, accounting for more than 40% of its net new ARR in the third quarter of 2024, demonstrating the increasing demand for these advanced tools in IT operations and incident management.
PD Benefits From Expanding Clientele
PagerDuty’s growing portfolio has been helping it expand its clientele, bolstered by partnerships with key industry players including Amazon (AMZN - Free Report) and Snowflake (SNOW - Free Report) .
PagerDuty recently announced new generative AI and automation features for PagerDuty Advance, integrated with Amazon’s cloud computing platform Amazon Web Service (AWS) tools like Amazon Bedrock, Bedrock Guardrails, and Amazon Q Business, to enhance incident management and operational efficiency.
PagerDuty has integrated its Operations Cloud with Snowflake Trail to help joint customers proactively manage incidents, improve operational efficiency, and reduce downtime using observability and incident management capabilities.
PD Initiates Strong FY24 Guidance
For the fourth quarter of 2024, PagerDuty expects revenues between $118.5 million and $120.5 million. Non-GAAP earnings for the fourth quarter are expected to be in the range of 15-16 cents per share.
For the fourth quarter, the Zacks Consensus Estimate for revenues is pegged at $119.46 million indicating a year-over-year increase of 7.50%.
The Zacks Consensus Estimate for fourth-quarter 2024 earnings is pegged at 16 cents per share, which has remained unchanged in the past 30 days.
For fiscal 2024, the company expects revenues in the range of $464.5 million-$466.5 million (compared with the previous guidance of $463.0 million-$467.0 million), representing a growth rate of 8% year over year.
Non-GAAP earnings are expected to be in the range of 78-79 cents per share (up from the previous guidance of 67-72 cents per share).
The Zacks Consensus Estimate for 2024 revenues is pegged at $465.54 million, indicating a year-over-year increase of 8.09%.
The Zacks Consensus Estimate for 2024 earnings is pegged at 78 cents per share, which has increased 11% in the past 30 days.
We point out that PagerDuty stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment.
In terms of Price/Book ratio, PD is trading at 15.83X, higher than the Zacks Internet - Software industry’s 3.78X.
However, PD’s robust AI portfolio and an expanding partner base are key drivers that make the stock attractive for investors.
PagerDuty stock currently carries a Zacks Rank #2 (Buy) and has a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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PagerDuty Declines 16% YTD: Should You Buy the Stock on the Dip?
PagerDuty (PD - Free Report) shares have plunged 15.7% in the year-to-date period against the Zacks Internet - Software industry’s rise of 38.3% and the broader Zacks Computer & Technology sector’s return of 35.5%.
PD has underperformed its peers, such as Atlassian (TEAM - Free Report) , which offers similar digital operations management solutions. TEAM shares gained 13.5% over the same time frame.
The underperformance can be attributed to ongoing weakness in the Small and Medium-sized Business segment and a challenging macroeconomic environment impacting the Enterprise segment, leading to longer sales cycles.
Despite these challenges, PD is benefiting from an expanding customer base and increased adoption of its Operations Cloud, including AIOps and automation capabilities.
PagerDuty Price and Consensus
PagerDuty price-consensus-chart | PagerDuty Quote
PD has seen a rise in high-value customers, with the number spending more than $100,000 in Annual Recurring Revenue (ARR) and increasing to 825 in the third quarter of 2024, a 6% rise compared with the last year. This highlights the growing adoption and expansion of PagerDuty’s solutions among large-scale customers.
PagerDuty Sees Growth With AI-Driven Automation Solutions
Growing demand for automation and generative AI has been a major growth driver for Pager Duty.
In response to this demand in the third quarter of 2024, PD introduced AI-driven solutions, such as PagerDuty Advance, which integrates generative AI to improve incident management and reduce response times. This innovation has attracted more customers seeking to automate and optimize its IT operations.
Increased demand for automated and intelligent incident management solutions has been noteworthy. In October, PagerDuty announced innovations for its Operations Cloud, enhancing AI-driven automation and machine learning to help organizations improve operational resilience, reduce downtime and mitigate the risk of outages.
The company’s AIOps and Automation capabilities have been key contributors, accounting for more than 40% of its net new ARR in the third quarter of 2024, demonstrating the increasing demand for these advanced tools in IT operations and incident management.
PD Benefits From Expanding Clientele
PagerDuty’s growing portfolio has been helping it expand its clientele, bolstered by partnerships with key industry players including Amazon (AMZN - Free Report) and Snowflake (SNOW - Free Report) .
PagerDuty recently announced new generative AI and automation features for PagerDuty Advance, integrated with Amazon’s cloud computing platform Amazon Web Service (AWS) tools like Amazon Bedrock, Bedrock Guardrails, and Amazon Q Business, to enhance incident management and operational efficiency.
PagerDuty has integrated its Operations Cloud with Snowflake Trail to help joint customers proactively manage incidents, improve operational efficiency, and reduce downtime using observability and incident management capabilities.
PD Initiates Strong FY24 Guidance
For the fourth quarter of 2024, PagerDuty expects revenues between $118.5 million and $120.5 million. Non-GAAP earnings for the fourth quarter are expected to be in the range of 15-16 cents per share.
For the fourth quarter, the Zacks Consensus Estimate for revenues is pegged at $119.46 million indicating a year-over-year increase of 7.50%.
The Zacks Consensus Estimate for fourth-quarter 2024 earnings is pegged at 16 cents per share, which has remained unchanged in the past 30 days.
For fiscal 2024, the company expects revenues in the range of $464.5 million-$466.5 million (compared with the previous guidance of $463.0 million-$467.0 million), representing a growth rate of 8% year over year.
Non-GAAP earnings are expected to be in the range of 78-79 cents per share (up from the previous guidance of 67-72 cents per share).
The Zacks Consensus Estimate for 2024 revenues is pegged at $465.54 million, indicating a year-over-year increase of 8.09%.
The Zacks Consensus Estimate for 2024 earnings is pegged at 78 cents per share, which has increased 11% in the past 30 days.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
What Should Investors Do With PD Stock?
We point out that PagerDuty stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment.
In terms of Price/Book ratio, PD is trading at 15.83X, higher than the Zacks Internet - Software industry’s 3.78X.
However, PD’s robust AI portfolio and an expanding partner base are key drivers that make the stock attractive for investors.
PagerDuty stock currently carries a Zacks Rank #2 (Buy) and has a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.