Datadog stock should see upside despite current investor indifference toward the software sector. So says an Evercore ISI analyst who initiated coverage with a buy rating.
New York-based Datadog operates a monitoring and analytics platform for software developers and information-technology departments. Datadog has a partnership with Amazon Web Services, the cloud computing unit of Amazon.com.
"Given Datadog's history of conservative guidance and a high level of investor apathy towards the software sector today, we do not see June results being a huge catalyst for the stock," Materne said. "However, when taking a view to the second half and beyond, we believe the risk/reward skews to the upside based on the potential for upside to estimates, (and) the continued expansion of Datadog's total addressable market."
Materne added: "Generative AI will create the need to analyze more data across more layers of the IT stack and this should play into DDOG's platform strategy. While Gen AI is not a near-term catalyst, we believe it could serve as an additional vector of growth over the long-term."
Datadog Stock Technical Ratings
Further, Materne set a price target of 150 on Datadog stock.
On the stock market today, Datadog stock rose 1.3% to close at 129.41. In 2024, DDOG stock has gained 8%.
Following a June rally, the iShares Expanded Tech-Software Sector ETF, an industry index, has gained 8.6%. The S&P 500 has advanced nearly 20%.
Meanwhile, Datadog stock holds a Relative Strength Rating of 71 out of a best-possible 99, according to IBD Stock checkup.
For the current quarter ending in June, Datadog says it expects revenue of $622 million and adjusted earnings of 35 cents.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
