Datadog’s Strong Performance and Promising Outlook Reinforce Buy Rating with Price Target of $165

Analyst Andrew Sherman of TD Cowen reiterated a Buy rating on Datadog (DDOG – Research Report), with a price target of $165.00.

Andrew Sherman has given his Buy rating due to a combination of factors indicating Datadog’s strong performance and promising outlook. He highlights the company’s impressive revenue growth of 25%, which surpassed the guidance of 21%, and the record-breaking $1 billion in bookings. The company’s net retention rate improved, and there was a notable increase in new customer additions, which were the highest for the year. The commentary on AI-native systems, log solutions, and sales capacity expansion was deemed optimistic, suggesting further growth potential.
Sherman views the revenue guidance as conservative, implying potential upside, and notes that the sales and marketing expenses are expected to grow significantly as the company accelerates hiring, indicating strong demand. The management’s focus on AI-native solutions and competitive advantages in log management also play a crucial role in the positive outlook. With $3 billion in annual recurring revenue and robust free cash flow margins, Datadog remains a top investment idea with a reiterated Buy rating and a price target of $165.

In another report released today, Rosenblatt Securities also maintained a Buy rating on the stock with a $160.00 price target.

Based on the recent corporate insider activity of 141 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of DDOG in relation to earlier this year.