PagerDuty Pops 26% On Raised 2021 Sales Outlook; Monness Lifts PT

Shares of PagerDuty jumped 26.2% on Friday after the software company posted better-than-expected 3Q results and raised its fiscal 2021 revenue guidance.

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PagerDuty’s (PD) third-quarter loss narrowed to an adjusted loss of $0.09 per share, from a loss of $0.10 in the year-ago period. Analysts had estimated a loss of $0.10 per share for the reported quarter. Its 3Q revenue increased 25.8% year-over-year to $53.8 million and topped the Street’s consensus of $52.6 million.

The company’s CEO Jennifer Tejada said, “Our digital operations plan accounted for nearly three quarters of our net new ARR [annual recurring revenue] illustrative of our successful shift from point solutions to the growing importance of our platform as critical infrastructure for our customer’s digital transformation.”

As for 4Q, the company expects revenues to generate between $57 million to $58 million, exceeding the consensus estimates of $55.6 million. PagerDuty anticipates its 4Q loss to be in the range of $0.11 to $0.12 per share, compared with analysts’ expectations of a loss of $0.10.

Meanwhile, for fiscal 2021, the company raised its revenue outlook to a range of $211 million to $212 million, up from its earlier forecast of $206 million to $211 million. Analysts’ estimates stand at $208.7 million. PagerDuty expects to post a loss per share in the range of $0.29 to $0.30, compared to the earlier guidance for a loss of $0.27 to $0.30 per share for fiscal 2021. Analysts forecast a loss of $0.29 for fiscal 2021. (See PD stock analysis on TipRanks).

Following the results, Monness analyst Brian White raised the stock’s price target to $46 (12.6% upside potential) from $35 and maintained a Buy rating. The analyst said, “We believe PagerDuty has a significant opportunity in the real-time digital operations market, plays squarely into the digital transformation trend and carries a much lower valuation compared to other next-gen software vendors in our coverage universe.”

Meanwhile, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 6 Buys and 5 Holds. The average price target stands at $38.22 and implies downside potential of about 6.4% to current levels. Shares have jumped by 74.6% year-to-date.