A Fresh Look at PagerDuty (PD) Valuation Following Recent Share Pressure and Revenue Growth Trends

PagerDuty (PD) shares have been under pressure recently, slipping 2% after a week that saw further declines of 5%. With a year-to-date return of -13% and a muted revenue growth rate, investors are keeping a close watch on the company’s ability to regain momentum.

See our latest analysis for PagerDuty.

PagerDuty’s share price has struggled to mount a comeback, with fading momentum reflected in its year-to-date decline of 13% and a one-year total shareholder return of -12.7%. After a stretch of muted revenue growth, the latest slip suggests investors are reassessing the company’s near-term growth prospects as broader market trends and tech sector sentiment shift.

If you’re keeping an eye on shifts in tech, it’s a great time to discover fast growing stocks with high insider ownership.

With shares trading at a notable discount to analyst targets, but revenue growth remaining modest, the question for investors is whether PagerDuty is undervalued right now or if the market has already priced in future improvements.

Most Popular Narrative: 18.3% Undervalued

PagerDuty’s most closely watched narrative sets its fair value at $19.14, nearly 18% above the latest close of $15.64. This viewpoint contrasts the current market pricing with expansive expectations for the company’s ability to unlock value as digital transformation accelerates.

The rapid growth in usage and complexity of digital infrastructure, especially within AI-native and large enterprise customers, alongside record platform utilization (over 25% year-over-year growth), points to rising demand for PagerDuty's core incident management and automation offerings. This can drive strong future recurring revenue as digital transformation accelerates globally.

Read the complete narrative.

What’s fueling this target? Underneath the headline figure are bold assumptions few are talking about: future earnings growth, ramping profit margins, and a high-multiple outlook usually reserved for market leaders. Wondering how those pieces fit together? The full narrative reveals the quantitative levers behind this surprising valuation jump.

Result: Fair Value of $19.14 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent competition and unpredictable effects from the new usage-based pricing model could challenge PagerDuty's momentum. These factors may put future growth projections at risk.

Find out about the key risks to this PagerDuty narrative.

Build Your Own PagerDuty Narrative

If you have a different perspective or want to piece together your own story from the numbers, you can build your own in under three minutes by using Do it your way.

A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding PagerDuty.

Looking for more investment ideas?

Your next winning investment might be closer than you think. Don’t let tomorrow’s biggest movers pass you by. Act now and expand your watchlist today.

• Uncover regular income opportunities by checking out these 19 dividend stocks with yields > 3% with yields over 3% to target stability in your portfolio.
• Position yourself early in groundbreaking AI advancements by analyzing these 25 AI penny stocks that are driving innovation across industries.
• Zero in on potential bargains by reviewing these 898 undervalued stocks based on cash flows to find quality companies trading below their intrinsic value.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com