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Datadog Firing on All Cylinders
Stock Analysis & Ideas

Datadog Firing on All Cylinders

Datadog’s (DDOG) shares are on the bull run since the monitoring and analytics platform released its Q3 earnings report on November 4.

The rampant digital transformation and cloud migration across industries led to strong demand for the company’s products, leading to a 75% jump in revenues and a 160% surge in non-GAAP earnings per share, year-over-year. The upbeat guidance for the full year of 2021 was another reason for investors to celebrate. (See Insiders’ Hot Stocks on TipRanks)

Expert Opines

Following the print, Needham analyst Jack Andrews analyzed the company’s developments and emerged positive about its prospects. “In our view, Datadog delivers a strong combination of product/market fit that should enable the company to execute against a large opportunity with a capital-efficient business model,” argued Andrews.

The analyst was encouraged by the company’s go-to-market strategy of selling infrastructure to customers which gradually progresses to the sale of the platform to the same customers. Moreover, customers believe that learning to monitor infrastructure is necessary early into their cloud-native journey. According to Andrews, Datadog is set to benefit from multiple long-term tailwinds and a large total available market.

Andrews reiterated a Buy rating on Datadog and raised its price target to $236 from $173.

More Potential Upsides

Notably, Datadog’s security products — Cloud Security Posture and Cloud Workload Security — represent an early-stage opportunity, as per management.

Additionally, management also noted that the competitive landscape is favorable, and the company is trying to capture more opportunities to add to its advantage.

Wall Street Weighs In

Turning to Wall Street, the analyst consensus, however, is cautiously optimistic about Datadog, with a Moderate Buy rating based on 10 Buys and four Holds. The average Datadog price target of $206 indicates an upside potential of 4.8%.

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.

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