Domo Posted A Double Beat On Q4 Results — So Why Is The Street Slashing Targets?

The cloud software company posted Q4 results on Tuesday, with revenue coming in at $79.6 million, higher than consensus estimates of $79.03 million.

• Domo also reported EPS of $0.03, while the Street expected the company to post a loss of $0.03 per share. 
• Despite the strong results, Lake Street lowered its price target on Domo to $7 from $13 and kept a ‘Hold’ rating on the shares, as per TheFly. 
• Cantor Fitzgerald cut the price target on the company to $8 from $13 and maintained an ‘Overweight’ rating on the shares, citing lower overall software multiples.

Domo Inc. (DOMO), a cloud software company that leverages artificial intelligence to provide real-time business data to improve executive decision-making, posted fourth-quarter (Q4) results on Tuesday that beat analysts’ expectations.

Despite the strong results, Wall Street analysts slashed price targets on the company. Lake Street lowered its price target on Domo to $7 from $13 and kept a ‘Hold’ rating on the shares, as per TheFly.

DA Davidson and Cantor Fitzgerald also lowered their price targets on the Utah-based company.

Street Rationale

Lake Street analyst Eric Martinuzzi said the lowered price target reflected a fair takeout price for the growth-challenged SaaS business after the company said in its earnings release that it expects revenue to be flat in FY27 with modest growth in its earnings per share.

DA Davidson analyst Lucky Schreiner lowered the price target on Domo to $6 from $10 and kept a ‘Neutral’ rating on the shares. While the firm noted Domo’s strong Q4 results, it said that it is waiting to see more upside to revenue growth prospects before becoming more constructive.

Cantor Fitzgerald cut the price target on the company to $8 from $13 and maintained an ‘Overweight’ rating on the shares, citing lower overall software multiples.

Based on data from Koyfin, Wall Street has a 12-month average target of $9.58 on Domo shares, representing an upside potential of about 90% compared to the current price levels of $5.04.

Domo Q4 Snapshot

The SaaS company posted a marginal 1% growth in Q4 revenue, coming in at $79.6 million, higher than consensus estimates of $79.03 million. Domo also reported EPS of $0.03, while the Street expected the company to post a loss of $0.03 per share.

However, the company refrained from providing specific forward-looking guidance, citing ongoing evaluation of strategic alternatives. The company’s CFO, Tod Crane, however clarified that Domo expects GAAP revenue to remain relatively flat for fiscal year 2027, and modest improvement in non-GAAP EPS and positive adjusted free cash flow.

Retail Sentiment

On Stocktwits, retail sentiment around DOMO shares jumped from ‘bullish’ to ‘extremely bullish’ territory over the past 24 hours, while message volumes climbed to ‘extremely high’ levels.

Shares of DOMO climbed after the results, and continued to increase on Wednesday. In the past year, DOMO stock has declined more than 37%.

Meanwhile, iShares Russell 2000 ETF (IWM) has climbed by over 25% in the past year, while the Vanguard Total Stock Market Index Fund ETF (VTI) has gained more than 21%.

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