Truist expects Datadog, Inc. (NASDAQ:DDOG) to post a beat and raise when it reports first-quarter earnings before the open on Thursday, May 4.
Analysts told investors in a note that buy-rated Datadog, which the firm has a $115 price target on, remains the strongest in the observability group based on conversations the firm is having with customers and partners.
"Optimization efforts have increasingly presented headwinds to revenue growth the last three quarters," said the analysts. "On their 4Q22 earnings call, management reset FY23 Street expectations lower, calling for headwinds that picked up at the end of the quarter to persist through the next year. That said, to start the year, conversations that we have had with customers indicate that their win rates remain high in cloud deals."
They added that DDOG management has created a favorable setup for the company, "positioning them for a beat-and-raise cadence through 2023."
"Additionally, the company's investments in security and dev tools, showcased at their October investor day, are an area of focus for the year as the company looks to lay the foundation for future expansion when macro headwinds settle," the analysts wrote.
Cloud stocks have seen strong upside on Wednesday, following results from Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL), with DDOG currently up more than 12%.