PagerDuty (PD) Stock Forecast & Price Target

PagerDuty Inc. is experiencing a positive trajectory in its financial performance, driven by robust customer acquisition and increased platform usage, with the company serving 15,247 paid customers, marking a slight increase year-over-year. The firm has raised its gross margin expectations for 2026 to $330 million, supported by a 2% increase in rig counts, which underscores operational efficiency amidst challenging industry conditions. Moreover, improvements in operating margins by 650 basis points and increased EBITDA estimates for 2025, 2026, and 2027 indicate strong profitability and potential for multiple expansion as the company continues to benefit from a diversified international presence and advancements in AI capabilities.

PagerDuty is experiencing a slowdown in revenue growth, with a notable deceleration in international revenue, which accounted for only 29% of total revenue despite a 7% year-over-year increase. The company is projecting a downside scenario indicating that a significant reduction in technology spending, challenges in customer expansion, and decreased renewal and expansion rates could lead to a revenue contraction of 250 basis points lower than previously estimated for CY 2025-2026. Additionally, under these conditions, PagerDuty's less attractive growth and margin profile could result in the stock receiving a lower earnings multiple, suggesting a potential decline in financial performance and valuation metrics.