Investing.com -- Analysts at JPMorgan have upgraded their rating of Datadog (NASDAQ:DDOG) to "overweight" from "neutral," arguing that the "worst period" of decelerating revenue growth at the software solutions group has most likely ended.
Along with other cloud infrastructure platforms like Amazon (NASDAQ:AMZN) Web Services and Microsoft's (NASDAQ:MSFT) Azure, New York-based Datadog has been grappling with a slowdown in IT spending by inflation-hit customers, the analysts said.
But in a note also bumping up their share price target of the business to $115 from $90, the analysts suggested that this downturn -- which had contibuted to Datadog's revenue growth slowing from 83% in early 2022 to 25% today -- may be starting to "moderate and level out."
The comments come after Datadog reported better-than-anticipated third-quarter revenue of $548 million and lifted its full-year financial projections. Its total number of new and existing customers also spiked by 20% year-on-year to 3,130 as of Sept. 30.
Shares in Data were lower in premarket trading on Wednesday after surging by more than 28% in the prior session.