Jefferies lowered its price target for Datadog to $230 from $280 and kept its Hold rating, citing risks tied to the company’s largest customers. The new target implies a valuation of 15 times. Datadog shares were quoted at $189.20 in the report, after falling nearly 21% over the previous week.
Datadog reported third-quarter revenue $57 million, or 5%, above expectations. Core growth accelerated for the fifth consecutive quarter, reaching the high-20% range. However, the company’s fourth-quarter outlook disappointed investors after management based its forecast on minimum commitments from its largest customer. Several large early renewals also reduced unit pricing and weighed on the sequential outlook.
Jefferies said it remains constructive on Datadog’s broad-based fundamentals and execution. The firm expects the shares could rise gradually over time as the company reduces its reliance on a concentrated group of customers.
Datadog reported third-quarter revenue of $1.2 billion, up 35.2% year over year, and adjusted earnings of $0.81 per share, above the cited analyst expectation of $0.64. Other firms also lowered their targets following the company’s outlook: BTIG cut its target to $260 while retaining a Buy rating, and Rosenblatt lowered its target to $285 from $305, also keeping a Buy rating. Guggenheim reiterated its Buy rating and $300 target, pointing to growth in AI-native contracts.
Sources: Investing.com News.