PagerDuty
PagerDuty
PD
1.19%
10%
- Shares currently trading 6% below cup-with-handle entry of 33.87
- Composite Rating stands at 98 out of a best-possible score of 99
- Accumulation/Distribution rating is B-plus; more buyers than sellers
Industry Group Ranking
Emerging Pattern
Cup with Handle
A positive chart pattern named such because it resembles the outline of a coffee cup with a handle. The pattern can last from seven weeks to as long as a year, but most are three to six months.
PagerDuty (PD) is the IBD Stock of the Day as the software maker's relative strength line buoys PD stock, which is near a 52-week high amid the bear market.
XOn the stock market today, shares slipped 1.2% to 31.64. PD stock, listed on the New York Stock Exchange, has climbed 20% in 2023.
Meanwhile, the software growth stock trades about 6% below a cup-with-handle entry point of 33.87.
Also, the PagerDuty initial public offering in 2019 raised $218.5 million.
Three former Amazon.com (AMZN) software developers founded PagerDuty in 2009. PagerDuty's cloud-based platform provides "incident response" support for applications being deployed by information technology departments. Rivals include Atlassian (TEAM) and Splunk (SPLK).
DevOps Demand Grows
In addition, PagerDuty uses Amazon's cloud computing infrastructure to run its software platform.
"The company's name has become synonymous with IT alerting," PD stock analyst Rob Oliver of Baird said in a recent note to clients. "The company's origin story — founded by Amazon IT staff seeking ways to make sense of the exponential growth in alerts amid tremendous growth — is highly compelling and has helped establish the company's strong reputation with DevOps (development and operations) teams."
At a growing number of companies, digital transformation means speeding up internal software development and deploying new applications quickly. The process includes monitoring how apps perform. It's called "DevOps."
PagerDuty customers include Allstate (ALL), DoorDash (DASH), Lululemon (LULU), Netflix (NFLX), Salesforce (CRM) and Shopify (SHOP).
"DevOps teams use PD to get real-time visibility into production apps, identify issues through data collection and machine-learning interpretation, and automatically engage the right people to accelerate resolution," Cowen analyst Derrick Wood said in a recent note.
Analytical AI, Not Generative AI
PagerDuty uses a form of artificial intelligence, known as machine learning, to automate its cloud platform. But it's not part of a new wave of software companies using content-creating "generative AI" technology.
On the company's recent fourth-quarter earnings call, "Management noted the typical style of AI utilized by the PagerDuty platform is called analytical AI," PD stock analyst Matthew Hedberg of RBC Capital said in a note.
He added: "These are foundational data models, which help identify and assess patterns or relationships in data. This is different from generative AI which is based on language models. While they are testing generative AI in some areas, management noted they are not looking to deploy it on the platform yet."
Also, analysts say PagerDuty could expand from IT on-call management into monitoring customer service, security, business operations and industrial operations.
In the fourth quarter, PagerDuty posted an 8-cent profit versus a 4-cent loss in the year-earlier period.
PD Stock: Profit Outlook Above Consensus
Further, PagerDuty reported fourth-quarter revenue growth of 29% to $101 million, topping estimates for 26% growth. Amid an uncertain outlook for the U.S. economy, PagerDuty forecast fiscal 2024 sales growth of 21% at the midpoint of its outlook.
In addition, PagerDuty forecast fiscal 2024 profit in a range of 45 cents to 50 cents, well above analyst estimates for 20 cents.
Meanwhile, PD stock holds an IBD Composite Rating of 98 out of a best possible 99, according to IBD Stock Checkup.
IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. Also, the best growth stocks have a Composite Rating of 90 or better.
Also, PD stock has an Accumulation/Distribution Rating of B+. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling.
The rating, on an A+ to E scale, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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