On Tuesday, TD (TSX:TD) Cowen maintained a Hold rating on shares of DOMO (NASDAQ: DOMO), but lowered the price target to $10.00 from the previous $11.50. This adjustment comes ahead of the company's first quarter 2025 earnings report, which is scheduled for release on May 23, 2024.
The firm's decision reflects cautious sentiment around DOMO's near-term performance, as industry checks indicate that demand remains steady but not robust. Sales cycles for the company have also been extended, suggesting a slower conversion of leads into revenue.
TD Cowen anticipates that the company will deliver financial results that align with expectations for both the quarter and the full fiscal year 2025. The market will be looking for updates on DOMO's consumption-based pricing model and the progress of its partnerships with SNOW and Databricks during the earnings call.
While the firm acknowledges the potential of new growth opportunities laid out by DOMO's management, it advises that these initiatives may need more time to develop before significantly impacting the company's financial performance. The revised price target reflects this cautious optimism and the need for the company's strategies to mature.
InvestingPro Insights
In light of TD Cowen's recent update on DOMO, real-time data from InvestingPro can offer additional context for investors. As of the last twelve months leading up to Q4 2024, DOMO boasts a gross profit margin of 76.34%, indicating strong profitability on its products and services. This impressive gross profit margin is a key metric for investors to consider, as it reflects the company's ability to maintain cost efficiency and could be a harbinger for potential future profitability.
However, it's important to note that despite this strong margin, analysts have revised their earnings downwards for the upcoming period, signaling potential concerns about the company's near-term financial outlook. This aligns with the cautious sentiment expressed by TD Cowen. Additionally, with a market cap of approximately $278.29 million and the stock trading near its 52-week low, investors may find the current valuation an interesting entry point, as DOMO's price target has been adjusted to $10.00, which is below the InvestingPro Fair Value estimate of $10.42.
For those looking to delve deeper into DOMO's financials and future prospects, there are more InvestingPro Tips available at https://www.investing.com/pro/DOMO. These tips can provide further insights into the company's performance and potential investment opportunities. Moreover, readers can take advantage of an additional 10% off a yearly or biyearly Pro and Pro+ subscription with the coupon code PRONEWS24.
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