- Marzo 9, 2022
- Posted by: Oliver
- Categoria: Economics, Finance & accounting
If it’s beaten-down names you’re after, then cloud software company Domo certainly fits the bill. The stock has pulled back 56% since last August’s peak.
Domo provides a comprehensive data analytics platform that combines data visualization, alerting, ETL, and machine learning in one solution giving workers the real-time data needed to make smarter decisions. In fact, via an array of real-time data visualization and management tools, the cloud-based platform allows CEOs to fully oversee their companies’ actions from their phones.
While Domo faces stiff competition from bigger players in the data visualization space, it has been growing the top-line steadily. The growth was on offer again in the latest quarterly report for FQ422, released earlier this month. Although the company exhibited a 1 cent miss on the bottom-line, dialing in adj. EPS of -$0.41, the revenue haul increased by 23.2% year-over-year to reach $69.99 million. That figure was $2.89 million higher than consensus expectations.
The good news is that the outlook beat the Street’s forecast too. Q1 revenue is anticipated to come in between $73.5 million and $74.5 million; Wall Street analysts were expecting $70.04 million.
That said, along with the earnings release, the company announced the surprise departure of founder and CEO Josh James. Former Chief Strategy Officer and ex VP at Adobe John Mellor is taking his place. While Morgan Stanley’s Sanjit Singh highlights the “potential for business disruption” that comes with a change in executive leadership, he believes that given Mellor’s credentials and comments on the earnings call the “risk of disruption is well contained.”
In any case, it is the growth profile which Singh finds appealing. He writes: “On the fundamentals of the business, the demand picture looks quite good as evidenced by 30% growth in billings and 25% growth in current RPO bookings. Guidance was even better as the high end of FY23 revenue guidance calls for 24% growth compared to 23% in FY22. Taken together, Domo looks well-positioned to sustain a mid 20% growth profile with multiple opportunities to take this higher over time – a prospect we do not think is fully reflected in the shares given a valuation of < 5x CY23sales.”
Based on the above, Singh rates Domo shares an Overweight (i.e. Buy), while his $90 price target suggests room for 110% growth over the coming year.
2 other analysts have been tracking Domo’s progress and they both agree with Singh, providing this stock with a Strong Buy consensus rating. The $87.67 average target is only marginally lower than Singh’s objective and set to generate returns of 105% in the year ahead.
