Datadog Inc (NASDAQ:DDOG) reported strong fourth-quarter results on Thursday, sending its shares sharply higher.
The Datadog Analyst: KeyBanc Capital Markets analyst Michael Turits upgraded Datadog shares from Sector Weight to Overweight, with a $210 price target, suggesting about 20% upside from current levels.
The Datadog Thesis: Datadog's results reaffirm KeyBanc's industry outlook for increased prioritization of cloud platform modernization including monitoring, analyst Turits said.
The company's strong performance comes despite slower growth reported by competitors Dynatrace, Inc. (DT) and NewRelic, the analyst noted. This shows Datadog is extending its growth and product scope leadership in observability, he added.
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The analyst sees the opportunity for sustained high growth within an expanded total addressable market, ongoing observability share gains, and potential for greater than historical share leadership. This, the analyst said, is made possible due to the company's high pace of innovation across cloud and modern workload use cases.
"While valuation remains high vs. peers, we see reduced risk for high growth software overall with >30% software down 43% from 52-week highs, and group's valuation premium nearly back to the 5-year average," Turits said.
DDOG Price Action: At last check Friday afternoon, Datadog shares were down 3.21% at $168.92.
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Photo by Drew Hays on Unsplash
