PagerDuty (PD) Valuation After Shareholder Investigation and Cut to Retention and Revenue Outlook

PagerDuty (PD) is back in the spotlight after a shareholder law firm launched an investigation into whether investors were misled ahead of the company cutting its net retention metrics and full year revenue outlook.

See our latest analysis for PagerDuty.

The investigation comes after a sharp reset in expectations, with the stock’s 30 day share price return of minus 16.6 percent contributing to a year to date decline of roughly 28 percent. A five year total shareholder return of about minus 72 percent highlights how momentum has been fading for a long time.

If this kind of volatility has you thinking about where else growth and execution might be rewarded, now could be a good moment to explore high growth tech and AI stocks.

With shares trading well below analyst targets, but growth slowing and profitability under pressure, is PagerDuty now a mispriced turnaround story for patient investors, or is the market correctly discounting its future growth potential?

Most Popular Narrative Narrative: 23.1% Undervalued

With PagerDuty last closing at $12.88 versus a narrative fair value of $16.75, the current share price sits well below the long term thesis being modeled.

The transition from seat based to usage based pricing models, validated by rapid growth in usage based product lines (60%+ year over year) and strong initial customer feedback, aligns future topline growth more closely with actual customer value realization. This sets the stage to reaccelerate ARR growth and improve net retention as automation reduces per seat dependency.

Read the complete narrative.

Curious how modest revenue growth assumptions still back a richer future earnings profile, a high return on equity, and a premium earnings multiple? The full narrative unpacks the exact growth, margin, and valuation bridge behind that gap.

Result: Fair Value of $16.75 (UNDERVALUED)

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

However, persistent seat optimization and fierce competition from integrated IT suites could cap revenue growth and pressure margins, which may undermine the undervaluation thesis.

Find out about the key risks to this PagerDuty narrative.

Build Your Own PagerDuty Narrative

If you are not fully aligned with this view, or would rather dive into the numbers yourself, you can build a personalized thesis in minutes: Do it your way.

A great starting point for your PagerDuty research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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