PagerDuty (PD) PT Raised to $13.50 at TD Cowen

TD Cowen analyst Andrew Sherman raised the price target on PagerDuty (NYSE: PD) to $13.50 (from $10.00) while maintaining a Buy rating.

The analyst commented: "Expecting Good Progress Under The New Team; THE TD COWEN INSIGHT PD reports on 8/27. We expect a modest beat & flow-through to FY guide. We look for a bullish update on the transition to the usage-based model (10% of ARR last qtr), which is the key driver to growth acceleration. Shares have more than doubled off the lows, but valuations still appear very inexpensive at 7x EV/FCF & we think can see further multiple expansion as growth improves.

Shares are -6% YTD (vs. EMCLOUD +14%) and have now round-tripped back to where the year started. Shares are +82% the past 6m (vs. EMCLOUD +49%). Trading at ~7x EVCY27E FCF and ~1.8x EV/CY27E Sales, valuations seem very inexpensive, and we think further multiple expansion should occur as the usage-based model gains traction & growth accelerates to mid-single digits. Reiterate Buy and raise PT to $13.50 (~8x EV/CY27E FCF) on higher sector multiples."

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