Datadog Inc (NASDAQ: DDOG) received a significant upgrade from Stifel analyst Brad R. Reback, who raised the stock’s rating from Hold to Buy. In addition, Reback increased the price target for Datadog from $98.00 to $140.00.
According to Reback’s survey, there has been a decline in installed-base optimization, with only about 38% of customers still actively optimizing compared to 50% in previous surveys. However, the analyst noted that almost half of the customers who are still optimizing indicated that they were close to completing their optimizations, which is an improvement from 8% in the last survey.
This data aligns with current consumption commentary and suggests positive growth prospects for Datadog in 2024. Customers continue to highlight the solid price-to-value ratio of Datadog’s offerings and expect to increase their spending by approximately 12% next year, compared to high-single digits in 2023. Respondents also anticipate that their cloud estates will experience more robust growth, further supporting the positive outlook for Datadog.
Reback expects Datadog to achieve revenue growth of around 25% in 2024, driven by current consumption trends and a stable macro backdrop. However, he anticipates that the company’s guidance will start at around 20%.
Datadog’s strong performance in the third quarter, as evidenced by its impressive earnings and stock price surge, further reinforces analyst optimism about the company’s future. This success also hints at a bullish recovery in the overall tech market.
In terms of price action, Datadog shares were trading higher at $114.91 at the time of the article’s publication, reflecting a 0.52% increase.
Overall, the upgraded rating and increased price target from Stifel analyst Brad R. Reback indicate a positive outlook for Datadog Inc. The company’s solid price-to-value ratio, expected increase in customer spending, and potential for growth in 2024 position it well for continued success in the cloud computing industry.
