In a report released yesterday, Koji Ikeda from Bank of America Securities reiterated a Hold rating on Datadog (DDOG – Research Report), with a price target of $144.00.
Koji Ikeda’s Hold rating on Datadog’s stock stems from a combination of factors indicating a balanced risk/reward scenario for potential investors. While Datadog’s fourth-quarter results were positive, surpassing expectations, the initial revenue guidance for 2024 fell short of the consensus. Although these conservative projections hint at the possibility for future beats and raises, and the company demonstrated strong sales execution in the last quarter, Ikeda is taking a cautious stance. The valuation of Datadog’s stock at 17 times its expected 2024 revenue relative to its peers suggests that it’s priced at a premium, and Ikeda believes that there must be a clear path to over 30% revenue growth to justify a more bullish outlook.
Furthermore, Ikeda acknowledges several positives, such as the impressive growth in net new revenue and operating margins, robust free cash flow generation, and the growing adoption of security products among customers. However, he also points out areas of concern, including the decline in net revenue retention for the third consecutive quarter, a slowdown in the addition of large customer accounts, and decelerating revenue growth in North America. These mixed signals contribute to Ikeda’s decision to maintain a Hold rating with a price objective of $144, reflecting a careful analysis of Datadog’s current financial health and market position.
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Datadog (DDOG) Company Description:
Founded in 2010, Datadog, Inc. provides a monitoring and analytics platform for developers, information technology operations teams and business users, through an SaaS-based data analytics platform.
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