Fed Governor Adriana Kugler to resign
On Tuesday, Wolfe Research analysts adjusted their outlook on Datadog (NASDAQ:DDOG), downgrading the company's stock from Outperform to Peer Perform. The stock, currently trading at $131.01, has seen a notable decline of nearly 10% over the past week, according to InvestingPro data. This comes as 25 analysts have recently revised their earnings expectations downward for the upcoming period. The research firm cited several factors influencing their decision, including a shift in the growth environment for Datadog, as revealed by recent channel conversations. These discussions pointed to increased optimization efforts by customers, resistance to spending from enterprises, and heightened competition in the industry.
The analysts also noted adjustments to their revenue forecasts for Datadog, decreasing their Total (EPA:TTEF) Revenue estimates for fiscal years 2025 and 2026 by 2.6% and 3.9%, respectively. This revision aligns with Datadog's recent fiscal year 2025 outlook provided by the company's management. Despite these adjustments, InvestingPro data shows the company maintains impressive gross profit margins of 80.81% and generated revenue of $2.68 billion in the last twelve months. Subscribers to InvestingPro can access 15 additional key insights about Datadog's financial health and growth prospects. Wolfe Research now anticipates Total Revenue growth of 19% in FY25 and 20.5% in FY26, which is a reduction from their previous growth estimates of 23% and 22%.
Datadog's stock valuation was another point of discussion in the Wolfe Research report. Currently, the stock is trading at approximately 11 times enterprise value to calendar year 2026 sales (EV/CY26 Sales), which is below its historical averages over one, three, and five years. These averages were reported at 13.7x, 14.1x, and 17.6x, respectively. According to the analysts, Datadog's valuation now aligns with its Heavyweight Growth peers, which are companies with more than 20% revenue growth forecasted for calendar year 2025 and trade at a median CY26 sales multiple of around 11 times.
Wolfe Research has set a fair value range for Datadog's stock between $100 and $140. Despite acknowledging that the company's management has likely incorporated a conservative approach in their guidance, the analysts concluded that with Datadog's stock trading at 11 times CY26 revenues and approximately 40 times free cash flow (FCF), they see limited valuation upside. According to InvestingPro's comprehensive analysis, Datadog is currently trading above its Fair Value, with a P/E ratio of 251.94x. For detailed valuation insights and access to the full Pro Research Report covering Datadog's financial health, growth prospects, and peer comparisons, investors can explore InvestingPro's advanced analytics platform. This assessment has led to the downgrade of Datadog's stock rating to Peer Perform.
In other recent news, Datadog has been the focus of several analyst reports. DA Davidson maintained a Buy rating on the company's stock, with a price target of $165. Analysts at the firm, including Gil Luria, highlighted Datadog's strong performance in the last quarter of 2024, driven by consistent consumption trends and contributions from AI native customers.
On a similar note, William Blair maintained its Outperform rating on Datadog. The firm's analyst, Jake Roberge, pointed out the company's impressive 25% revenue growth and its annual recurring revenue exceeding $3 billion.
Goldman Sachs also reiterated its Buy rating and $162.00 price target on Datadog, following the company's fourth-quarter financial performance. The firm noted Datadog's revenue exceeding consensus estimates by 3.2% and significant improvements in operating margin and free cash flow margin.
However, Stifel analysts adjusted their outlook on Datadog shares, reducing the price target to $125 from the previous $140 while maintaining a Hold rating. The revision follows Datadog's financial performance update, which revealed a slight uptick in revenue but fell short of the market consensus.
Lastly, BTIG analysts adjusted their price target on Datadog shares to $162.00 from the previous target of $171.00, while maintaining a Buy rating on the stock. The adjustment followed Datadog's fourth-quarter earnings report, which revealed revenue figures that matched the high-end projections set by BTIG earlier in the year.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.