Piper Sandler upgraded Datadog (NASDAQ:DDOG) to Overweight from Neutral and raised its price target to $115.00 from $88.00.
The firm's rationale for the upgrade includes the belief that the cloud-related challenges affecting Datadog's performance have largely been addressed in recent quarters, with adjustments made to expectations following last quarter's guide down.
Additionally, it sees signs of stabilization in the demand for infrastructure and DevOps software, coupled with incremental opportunities around security and AI.
“We favor the disruptive nature of the company's solutions, think its platform play will continue to resonate and believe its best days are still ahead,” added Piper Sandler.
Meanwhile, UBS initiated coverage on the company with a Neutral rating and a price target of $100.00.
According to UBS, the recent slowdown in Datadog's revenue growth, dropping from 44% in Q4/22 to high teens in Q4/23, is primarily due to cyclical spend optimization efforts. While the bank anticipates these headwinds to ease in the future, the timing remains uncertain, and the stock may already reflect this expectation.
UBS also raised questions about other factors affecting Datadog's growth, such as increased competition, potential customer resistance to pricing structures, saturation in infrastructure and application monitoring, Datadog's customer mix, and slower growth among larger customers following optimization efforts.