Monday saw UBS reaffirm its Buy rating and $175.00 price target for Datadog (NASDAQ:DDOG) shares. In a recent statement, UBS analyst Karl Keirstead provided insights ahead of Datadog's fourth-quarter earnings report, scheduled for February 13, 2024. According to InvestingPro data, analyst targets for the stock range from $128 to $230, with the company maintaining an impressive gross profit margin of 81.24%. Keirstead's discussions with several Datadog partners suggest a "stable to slightly improving" demand environment, leading him to anticipate a solid, although not exceptional, earnings beat for the last quarter of 2024.
Datadog's stock performance has shown a decline of 15% since early December. This downtrend is attributable to growing investor concerns regarding the company's exposure to AI and potential impacts from Microsoft (NASDAQ:MSFT)'s weaker-than-expected non-AI Azure results. Despite these concerns, Keirstead believes that the current sentiment has overly penalized the stock. InvestingPro analysis suggests the company maintains strong fundamentals with a "GREAT" financial health score and robust revenue growth of 26.3% over the last twelve months.
The analyst's outlook for Datadog is based on partner feedback, which hints at a consistent demand for the company's services. This feedback, coupled with the recent dip in stock price, has led Keirstead to maintain a positive stance on the company's stock, suggesting that the current market concerns may be overstated.
Datadog, which provides monitoring and analytics for cloud-scale applications, has been closely watched by investors for signs of growth and stability in the competitive tech sector. The upcoming earnings report is expected to provide further clarity on the company's performance and future outlook.
Investors and market watchers are now looking forward to Datadog's fourth-quarter earnings release on February 13, 2024, for confirmation of the trends highlighted by UBS and to gauge the company's trajectory in the evolving cloud technology landscape. For deeper insights into Datadog's valuation and growth prospects, InvestingPro subscribers can access comprehensive Pro Research Reports, which include detailed analysis of the company's financial health, valuation metrics, and growth trajectory among 1,400+ top stocks.
In other recent news, Datadog has been the subject of multiple analyst reviews and strategic developments. The company's shares experienced a downgrade from Stifel, shifting their stance from "Buy" to "Hold" due to concerns about the company's revenue growth and margins. Stifel also lowered the price target to $140, down from $165, ahead of the company's fourth-quarter earnings report. Similarly, Morgan Stanley (NYSE:MS) downgraded Datadog's stock to Equal-weight, citing a balanced risk-reward scenario.
On the other hand, TD Cowen maintained a Buy rating on Datadog, keeping the price target steady at $165, and anticipates a strong finish for the company's fourth quarter. UBS also reiterated a Buy rating, raising its price target to $175 from $150, highlighting the company's long-term growth opportunities. Loop Capital maintained a Buy rating as well, projecting a significant Free Cash Flow of $7.9 billion by FY34.
Guggenheim maintained a neutral position due to the stock's current valuation and potential risks associated with the company's guidance. The firm projects a 23% growth for the company in FY25.
In other developments, Datadog has reported a 26% year-over-year revenue increase, reaching $690 million, and has expanded its Board of Directors with the appointment of Amit Agarwal. These are recent developments that reflect the ongoing changes and growth prospects in the company.
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