Why Domo Stock Rocketed More Than 16% Higher Today

Key Points

• An analyst upgraded his recommendation on the shares.

• He's now a Domo bull and feels it's moving in the right direction on a number of fronts.

• 10 stocks we like better than Domo ›

On Tuesday, one day before it's slated to publish its latest set of quarterly earnings, data analytics company Domo (NASDAQ: DOMO) earned a recommendation upgrade from an analyst. Investors took this to heart, pushing the company's share price up in excess of 16%. That performance was miles better than the S&P 500 index's 0.4% increase.

A pre-earnings upgrade

The upgrade came from TD Cowen's Derrick Wood, who now feels Domo stock is a buy; previously, he ranked it as merely a hold. In changing his recommendation, Wood also increased his price target by almost 62% to $21 per share from the previous $13.

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In his latest analysis, according to reports, Wood cited several positive developments that should spur growth. He was particularly bullish on the specialty tech company's move from per-seat to consumption-based pricing, which in his view would increase both adoption and the company's potential for monetizing its services.

The pundit also feels that Domo is something of a sleeper stock in a very limited pool of next-generation data and infrastructure titles on the market. In his view, investors are increasingly hungry to own such stocks. However, there are not very many listed on U.S. exchanges just now.

Can it keep up the momentum?

Domo is slated to release its second quarter of fiscal 2026 figures after market hours on Wednesday.

The company's Q1 figures, published in May, showed several encouraging developments in the fundamentals. While revenue was basically flat year over year, Domo managed to narrow its net loss considerably, and it also reported a steep (24%) increase in remaining performance obligations (RPOs) -- the funds it's owed from subscribers for the remaining portion of their subscriptions.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.