On Friday, TD Cowen maintained a Hold rating on shares of DOMO (NASDAQ:DOMO) with a consistent price target of $8.00. The firm's stance comes after DOMO's reported fourth-quarter billings decline of 7%, which fell short of the market's expectation of a flat growth rate. This downturn was primarily attributed to the loss of a significant customer, prompting a revision of revenue and margin forecasts.
The company's recent financial results have led to adjustments in expectations. Despite the disappointing billings growth, there is an anticipation of improvement in gross retention in the second quarter. This optimism is based on the company overcoming the total time market (TTM) pressures from customer losses and achieving a more stable renewal rate.
In addition to expected improvements in customer retention, there are positive indicators regarding DOMO's net revenue retention (NRR) from early consumption cohorts. These early signals suggest potential for future revenue growth as these customer segments expand their use of DOMO's services.
However, the analyst noted that the company's turnaround efforts are ongoing and yet to be fully realized. The trajectory of DOMO's recovery and growth is still considered a work-in-progress, with close monitoring required to assess the effectiveness of strategies implemented to mitigate recent setbacks.
In summary, while there are elements within DOMO's operations that suggest potential for recovery, the current analysis by TD Cowen indicates the need for caution, with no immediate change to the stock's rating or price target.
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