Citizens has revised its outlook on Domo (NASDAQ:DOMO), moving the stock from Market Outperform to Market Underperform and setting a new price target of $3.50. The firm underscored several structural and near-term challenges that informed the downgrade.
At the time Citizens released its rating change, Domo shares were trading at $4.66 and carry a WEAK overall financial health score according to InvestingPro data. The company’s equity has suffered a sizeable decline year-to-date, with a 43% drop reported in the consumer note and a 44.72% fall recorded in InvestingPro’s figures. The stock is trading close to its 52-week low of $4.51 and stands about 75% below its 52-week high.
Citizens identified three core areas of concern. First, competition in Domo’s addressable market is intense, particularly inside the Snowflake ecosystem where both established players and newer entrants are active. Citizens also singled out privately-held Sigma Computing, which the firm noted had achieved $100 million in annual recurring revenue and reported 83% growth in April 2025 as an illustration of competitive pressure.
Second, Citizens focused on Domo’s debt position. The company carries an outstanding principal of roughly $124 million at an approximate interest rate of 12.5%, with the debt due in August 2028. Citizens contrasted that obligation with the company’s reported cash balance of $48 million, highlighting the potential strain of high-rate debt on Domo’s liquidity.
Third, attached to that financing are covenants that Citizens considers constraining. The covenants require Domo to achieve ARR of $285 million by the end of fiscal Q4 2026, an adjusted EBITDA target of about $12.1 million, and to maintain an unrestricted cash balance of $25 million. Citizens flagged those thresholds as material performance conditions that will influence the company’s flexibility into fiscal 2026.
Recent operating results have offered a mixed picture. Domo reported third-quarter fiscal 2026 results that met revenue expectations but experienced a shortfall in billings, which management attributed to longer sales cycles for partner-related deals. In the wake of those results, DA Davidson adjusted its price target for Domo downward from $13 to $10 while keeping a Neutral rating.
Despite commercial headwinds, Domo continues to roll out product initiatives. The company introduced Domo MMM, an AI-driven marketing measurement solution developed with Stella Growth Intelligence to help marketers assess campaign performance. It also launched App Catalyst, a capability inside its AI and Data Products Platform designed to let users build custom applications through natural language prompts while preserving data governance and security controls.
On the customer and leadership fronts, Domo announced a strategic engagement in which Australian retailer National Tiles partnered with Domo and Snowflake to modernize data operations and materially expand Domo’s user footprint. Separately, CEO Joshua G. James has stepped back from some duties to concentrate on health; CTO Daren Thayne will serve as Interim Principal Executive Officer while retaining his existing roles and compensation arrangements. No related party transactions were disclosed in connection with that change.
Taken together, Citizens framed the downgrade as a reflection of intensified competition, a substantial debt burden with high interest costs and covenant tests, and execution pressures evident in billing shortfalls. The firm’s new $3.50 price target and Market Underperform rating reflect those concerns while acknowledging Domo’s ongoing product and partnership activity.
Summary - Citizens has downgraded Domo to Market Underperform and reduced its price target to $3.50, citing competitive pressures, a $124 million debt load at roughly 12.5% due August 2028, and restrictive covenants that require specific ARR, adjusted EBITDA and cash metrics by fiscal Q4 2026. Domo reported Q3 fiscal 2026 revenue in line with expectations but weaker billings, launched new AI-driven products, and saw an internal leadership adjustment as its CEO stepped back to focus on health.