Datadog (DDOG:NSD)STA Research maintains “Buy”, sees 15% more upside in stock

Datadog Inc.

DDOG Ratings Coverage:

Datadog (DDOG) shares have just surged on a positive outlook update, and STA Research (Rank#93)maintained its bullish stance on the stock, maintaining its “Buy” rating and 12 month price target of $86 per share. The stock is currently trading at around $75 per share

Datadog is a cloud-based monitoring and analytics platform that helps companies monitor their infrastructure, applications, and logs. Its platform integrates with more than 400 technologies, including AWS, Azure, Google Cloud, Kubernetes, and more, allowing customers to monitor their entire stack in one place.

The company’s first earnings report, released today, on May 4th, exceeded expectations and showed strong growth. Revenue was up 32.8% year-over-year, and the company raised its full-year outlook.

STA Research believes that Datadog’s strong momentum will continue, driven by the company’s ability to attract large enterprise customers and expand its product offerings. The research firm notes that Datadog’s platform is becoming increasingly critical to its customers, and the company has been successful in upselling and cross-selling its products to existing customers.

Datadog’s platform is particularly valuable in a world where companies are increasingly relying on cloud infrastructure and complex distributed systems. The company’s ability to help customers monitor and manage these systems is a significant advantage, and STA Research believes that the demand for Datadog’s services will only continue to grow.

In addition to its strong business fundamentals, Datadog is also a beneficiary of the ongoing shift toward remote work and digital transformation. As more companies shift their operations to the cloud, Datadog’s platform is well-positioned to benefit.

STA Research is optimistic about Datadog’s prospects and believes that the company is poised for long-term growth. With a target price of $86 per share and a buy rating, the research firm is encouraging investors to take a closer look at this high-growth tech stock.

However, it’s worth noting that not all analysts are as bullish on Datadog. Stock Target Advisor’s fundamental analysis of the stock is bearish, based on two positive signals and six negative signals.

Earnings and Outlook:

Datadog, a cloud software provider, reported better-than-expected earnings for the first quarter, causing the company’s shares to rise by over 14% on Thursday. Datadog said that for the quarter ending on March 31, it earned an adjusted 28 cents per share as its revenue rose 32.8% YoY to $482 million, beating analysts’ expectations of an adjusted gain of 24 cents per share and $469 million in sales. During the same period, the company generated $133.8 million in operating cash flow and $116.3 million in free cash flow, leaving it with $2 billion in cash on its balance sheet.

The results were attributed to the company’s continued growth in larger customers, as it had 2,910 customers spending more than $100,000 in annual recurring revenue, up from roughly 2,250 in the year-ago period. Moreover, the company raised its full-year guidance, expecting to generate between $2.08 billion and $2.1 billion in sales, up from a previous guidance of $2.07 billion to $2.09 billion. Datadog also increased its adjusted earnings forecast to between $1.13 and $1.20 per share, up from a prior view of $1.02 to $1.09 per share.

Datadog’s second-quarter guidance, however, was slightly below consensus, as the company expects sales to be between $498 million and $502 million, with the mid-point slightly below the consensus of $500.94 million. Despite the lower-than-expected guidance, investors were still optimistic about Datadog’s strong quarterly performance and raised full-year outlook.

Datadog’s platform is known for helping customers monitor their cloud-based servers, applications, and networks, providing real-time insights into their IT infrastructure. The company’s cloud-based monitoring tools have been in high demand as more organizations continue to migrate to the cloud and adopt a hybrid work environment, where employees work remotely.

 

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