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On Tuesday, Barclays (LON:BARC) updated its outlook on Datadog shares (NASDAQ:DDOG), increasing the price target to $128 from $125, while maintaining an Overweight rating on the stock. With a current market capitalization of $36.84 billion and trading at $106.06, InvestingPro analysis suggests the stock is currently trading above its Fair Value. The revision follows Datadog’s announcement of robust first-quarter results, which were notably influenced by contributions from its AI-Native technology, improved bookings from new customers, and significant expansions among its larger clients.
The company’s performance in the first quarter was highlighted by a combination of factors that pointed to a strong start to the year. According to Barclays, the AI-Native offerings played a significant role in driving the quarter’s success, with the company maintaining impressive gross profit margins of 80.81% and achieving revenue growth of 26.12% over the last twelve months. This performance suggests that Datadog’s investment in artificial intelligence is paying off.
The firm also noted an uptick in new customer bookings, a key indicator of future revenue growth. This uptrend is a positive sign for Datadog’s market penetration and its ability to attract new business in a competitive landscape.
Another area of strength for Datadog was the expansion of business with existing large customers. The ability to grow accounts is often seen as a testament to the value a company’s solutions provide, and Datadog’s performance in this regard indicates a strong vote of confidence from its client base.
While the Barclays analyst acknowledged that Datadog’s margins might be a point of concern in the near term, they believe that the company’s guidance and potential for better growth could offset any immediate worries regarding profitability.
The revised price target and sustained Overweight rating reflect Barclays’ optimism about Datadog’s future performance, based on the solid results reported for the first quarter. The firm’s analysis suggests that the positive trends observed in the company’s operations could continue to support the stock’s valuation going forward.
In other recent news, Datadog Inc . reported strong financial results for the first quarter of 2025, surpassing Wall Street’s expectations. The company achieved earnings per share (EPS) of $0.46, exceeding the forecasted $0.43, and reported revenue of $762 million, which was higher than the anticipated $741.81 million. Datadog also raised its full-year 2025 revenue guidance to a range of $3.215 billion to $3.235 billion. The company continues to see significant growth in AI and security product adoption, contributing to its strong performance. Additionally, Datadog recently announced acquisitions of EPO, a feature management platform, and MetaPlan, a data observability platform, to enhance its product offerings. The company is also planning to launch a new data center in Australia to better serve local customers. Analyst firms have not reported any recent upgrades or downgrades for Datadog, but the company’s robust earnings and strategic acquisitions highlight its positive trajectory.
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