PagerDuty stock downgraded as analyst worries about ‘treacherous’ path in software

Shares of PagerDuty Inc. were falling about 1% in premarket trading Friday after Monness, Crespi, Hardt & Co. analyst Brian White downgraded the stock to neutral from buy. “The last several months have been an especially painful experience for those next-gen, software companies still young to the capital markets, and we believe the path forward will prove treacherous,” White wrote. “Moreover, PagerDuty’s stock has enjoyed a strong rebound from the lows made in May; however, we fear this strength will fizzle out in due time.” He acknowledged that the company has big opportunities ahead of it in the market for digital-operations tools, but he said that PagerDuty’s software is “often used on top of observability platforms and integrated with other software products,” and there have been some cautious recent signals from “observability players.” PagerDuty shares have risen about 19% over a three-month span as the S&P 500 has increased 7%.

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