Datadog Barking Up the Right Tree; Outlook Healthy

Going public in September 2019, Datadog, Inc. (DDOG) was in the right place at the right time. With the pandemic accelerating digital and cloud trends, the SaaS cloud observability company multiplied its valuation in a relatively short period. The tech-wide sell-off over the last quarter knocked DDOG off of its perch temporarily, although the company nonetheless managed to pull off phenomenal earnings last week, and investors are interested yet again.  

Updating his hypothesis and raising his price target was Brian White of Monness, who elaborated that Datadog posted revenues up 84% year-over-year, an impressive metric considering last year’s pandemic-driven profits. Additionally, the company bested Wall Street consensus estimates on its earnings per share, and provided a record operating margin.  

While the near-term may prove uncertain for DDOG and its tech peers, its outlook appears strong.  

White rated the stock a Buy, and raised his price target to $228 from $220. This new target now suggests a 12-month upside of 36.20%.  

Noting that the earnings call “bubbled with optimism, and was justified given the company’s performance,” the five-star analyst added that Datadog saw increases in product use by existing customers, as well as an expanding product offering in general.  

All of this robust growth, and White does not see it slowing down any time soon. He believes that “the combination of an improving global economy and accelerated digital transformation initiatives, driven by the pandemic, bodes well for demand around next-gen observability solutions, benefitting Datadog.” 

He went on to assert that the stock may “command a premium valuation relative to other next-gen software vendors.” Even better, White is not alone in his sentiment. On TipRanks, DDOG has an analyst rating consensus of Strong Buy, based on 14 Buy, two Hold, and one Sell rating. The average Datadog price target is $214.63, indicating a possible 12-month upside of 28.21%.  

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