DA Davidson Raises Price Target for Domo (DOMO) to $15.00 While Maintaining Neutral Rating

DA Davidson analyst Lucky Schreiner raised the price target for Domo (DOMO) to $15.00 while maintaining a neutral rating, a 66.67% increase. Historically, Domo has seen varied analyst actions and ratings in 2025, with some analysts upgrading the stock to "Buy" and raising price targets. The average target price for Domo is $16.83, with a high estimate of $21.00 and a low estimate of $9.00, implying an upside of 9.31% from the current price of $15.40.

DA Davidson analyst Lucky Schreiner has raised Domo's (DOMO) price target to $15.00, a 66.67% increase from the previous target of $9.00, while maintaining a Neutral rating. The upgrade is attributed to robust Q2 results, driven by partner-led pipeline growth [1].

Domo's Q2 2026 results highlighted a 19% increase in subscription Remaining Performance Obligations (RPO) to $409.8 million, with a first positive non-GAAP EPS of $0.02. The consumption model shift boosted 108% Net Revenue Retention (NRR) for contract customers and secured long-term partnerships, including a 3-year CDW joint solution [1]. The company's ecosystem collaborations with Snowflake and AI tools like Agent Catalyst have strengthened its position in the $30B AI analytics market, projected to grow at 25% CAGR [1].

Despite these positive developments, Schreiner's Hold rating reflects a cautious approach. The analyst acknowledges the company's progress but remains mindful of the challenges that lie ahead. The raised revenue guidance for FY26 indicates slight growth, but not enough to warrant a more aggressive rating. The valuation of Domo’s shares at approximately 2x CY26E revenue aligns with its growth peers, supporting the Hold recommendation [1].

According to TipRanks, Schreiner is an analyst with an average return of -14.4% and a 13.33% success rate. Schreiner covers the Technology sector, focusing on stocks such as C3ai, Progress Software, and Box [1].

Lake Street, another analyst firm, has also enhanced its outlook for Domo, raising the price target to $16 while maintaining a Hold rating. Analyst Eric Martinuzzi expressed optimism after Domo exceeded billings expectations for the quarter and increased the midpoint of its fiscal 2026 revenue guidance [2].

Domo Inc, a player in the technology sector, operates within the software industry, providing a cloud-based platform that digitally connects data, systems, and people within organizations. This platform enables real-time data access and insights, allowing businesses to manage operations from smartphones. Domo's revenue model is primarily subscription-based, supplemented by professional services [2].

Financial Health Analysis
Analyzing Domo's financial health reveals a mixed picture:
Revenue Growth: The company reported a trailing twelve-month revenue of $317.05 million, with a 1-year revenue growth rate of -7%. Over a 5-year period, revenue growth stands at 6.1% [2].
Profitability: Domo's profitability metrics are concerning, with an operating margin of -16.46% and a net margin of -23.33%. The gross margin, however, is relatively strong at 74.47% [2].
Balance Sheet Strength: The company's financial strength is under scrutiny, with a current ratio of 0.51 and a quick ratio of 0.51, indicating potential liquidity issues. The debt-to-equity ratio is -0.74, suggesting a negative equity position [2].
Warning Signs: The Altman Z-Score of -10.27 places Domo in the distress zone, indicating a high risk of bankruptcy within two years. The Piotroski F-Score is low at 2, implying poor business operations [2].

Business Performance
Domo's business performance is characterized by several key trends and challenges:
Revenue Trends: The company has experienced a decline in revenue per share over the past 12 months, highlighting challenges in maintaining growth momentum [2].
Operational Efficiency: Despite a negative operating margin, there are signs of margin expansion, which is a positive indicator for future profitability [2].
Industry Considerations: As a technology company, Domo faces intense competition and rapid technological advancements, necessitating continuous innovation and adaptation [2].

Valuation & Market Sentiment
Examining Domo's valuation and market sentiment provides further insights:
Trading Metrics: The price-to-sales (P/S) ratio is 2.16, close to its 2-year high, indicating potential overvaluation. The company lacks a positive P/E ratio due to negative earnings [2].
Analyst Targets: The target price is set at $16.83, with a recommendation score of 2.2, reflecting a cautious outlook [2].
Technical Indicators: The Relative Strength Index (RSI) is 67.07, suggesting the stock is nearing overbought territory. The stock's 20-day simple moving average is $15.17, above its 50-day and 200-day averages [2].
Ownership: Institutional ownership stands at 63.96%, while insider ownership is 10.82%, indicating significant interest from institutional investors [2].

Risk Assessment
Assessing the risks associated with Domo reveals several factors:
Financial Health Grades: The company's financial strength is rated as poor, with a Beneish M-Score of -3.66, suggesting it is unlikely to be a manipulator [2].
Sector-Specific Risks: As a technology firm, Domo is exposed to risks such as technological obsolescence and cybersecurity threats [2].
Volatility and Beta: The stock exhibits high volatility with a beta of 2, indicating significant price fluctuations relative to the market [2].

In conclusion, while Domo has shown some positive developments, such as exceeding billings expectations, the company faces significant challenges in achieving sustainable growth and improving its financial health. Investors should carefully consider these factors when evaluating Domo's potential as an investment opportunity.

References:
[1] https://www.tipranks.com/news/ratings/cautious-optimism-hold-rating-for-domo-amid-positive-trends-and-growth-challenges-ratings
[2] https://www.gurufocus.com/news/3084980/domo-domo-target-price-raised-as-company-exceeds-expectations