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On Wednesday, Bernstein SocGen Group adjusted its price target for Datadog (NASDAQ:DDOG), a cloud-based monitoring and analytics platform, reducing it to $145 from $151. Currently trading at $106.06, the stock sits well below analyst targets ranging from $115 to $175. Despite the price target reduction, the firm maintained its Outperform rating on the company’s shares. According to InvestingPro data, Datadog maintains strong financial health with an overall score of "GOOD."
Datadog’s first-quarter earnings for 2025 were described as having achieved a "normal" level of outperformance, with revenues exceeding guidance by $23 million. The company maintains impressive gross profit margins of 80.15% and has achieved 25.54% year-over-year revenue growth. This performance was in line with the first half of 2024 but did not reach the higher levels seen in the second half of that year. The standout detail in the report was the significant revenue contribution from companies described as "Born-in-AI," which climbed to 8.5% of total revenue, up from 6% in the previous quarter. This segment was responsible for nearly the entire revenue beat in the quarter.
The company’s net new customer bookings also saw a substantial year-over-year increase of 70%, contributing to a robust upward revision in the second-quarter and full-year guidance. However, Datadog has chosen to maintain a conservative stance by not adjusting its guidance for the second half of the year.
Bernstein’s analysts have made slight adjustments to their projections, increasing the expected quarter-over-quarter revenue from AI-related businesses for Q2, while keeping the contribution from non-AI enterprise segments constant. They also reduced expectations for new customer revenue and lowered margin forecasts by 250 basis points.
The new price target of $145 is derived from a combination of valuation methods, including a 50/50 blend of 14 times next twelve months (NTM) revenue—down from a previous multiple of 16—and a discounted cash flow (DCF) analysis with an 11% weighted average cost of capital (WACC) and a 3% terminal growth rate. Despite the reduced price target, Bernstein’s analysts continue to see Datadog as an Outperform-rated investment. For deeper insights into Datadog’s valuation and growth prospects, InvestingPro subscribers can access comprehensive Fair Value analysis and 15+ additional ProTips in the detailed Pro Research Report.
In other recent news, Datadog has reported impressive financial results for the first quarter of 2025, surpassing Wall Street expectations. The company achieved earnings per share of $0.46, exceeding analysts’ forecasts of $0.43, while revenue reached $762 million, surpassing projections of $741.81 million. Datadog also raised its full-year 2025 revenue guidance to a range of $3.215 billion to $3.235 billion, indicating a growth rate of 20% to 21%. Barclays (LON:BARC) has responded to these solid results by raising its price target for Datadog shares from $125 to $128, maintaining an Overweight rating. The firm attributes this optimism to Datadog’s strong performance, particularly in its AI-Native technology and expanded business with larger clients.
Additionally, Datadog’s continued growth in AI and security product adoption has been highlighted as a significant factor in its success. The company has also announced plans to introduce more AI-related capabilities at its upcoming DASH conference in June. Despite some concerns about margins, Barclays remains optimistic, suggesting that Datadog’s guidance and growth potential could alleviate any immediate profitability worries. These developments reflect a positive outlook for Datadog as it continues to strengthen its market position and expand its offerings.
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