FTSE 100: Index falls as earnings results weigh; pound below $1.33, Bodycote soars
On Thursday, TD Cowen maintained a Buy rating on Dynatrace Inc. (NYSE:DT) but reduced the price target from $67.00 to $55.00. The adjustment comes ahead of the company’s fourth fiscal quarter report, scheduled for May 14. According to InvestingPro data, Dynatrace maintains a "GREAT" financial health score, with 27 analysts recently revising their earnings estimates upward for the upcoming period. TD Cowen anticipates a modest beat on both annual recurring revenue (ARR) and subscription revenue in constant currency terms.
Analysts at TD Cowen project a 15% growth in ARR and a 14% increase in subscription revenue for the fiscal year 2026. They predict that subscription revenues will exceed expectations, while ARR is likely to fall slightly short. The company’s strong fundamentals are evident in its impressive 82.24% gross profit margins and robust 19.81% revenue growth over the last twelve months, as reported by InvestingPro.
The firm highlighted that Dynatrace shares have declined by 20% year-to-date, underperforming slightly compared to the EMCLOUD index, which is down 18%. According to InvestingPro’s Fair Value analysis, the stock currently appears undervalued. Get access to 10+ additional exclusive ProTips and comprehensive valuation metrics for Dynatrace through InvestingPro’s detailed research reports, available for 1,400+ top US stocks.
Dynatrace is seen as a cash flow compounder and a core holding for Growth at a Reasonable Price (GARP) investment portfolios. The reiteration of the Buy rating reflects confidence in the company’s fundamentals, with the company holding more cash than debt on its balance sheet and maintaining profitable operations over the last twelve months. The price target has been adjusted to $55, which corresponds to around 30 times the EV/CY26E FCF, in line with lower sector multiples.
In other recent news, Dynatrace has announced early access to its Grail platform on Google (NASDAQ:GOOGL) Cloud, designed to enhance data management and insights for joint customers. This development aims to streamline operations by integrating observability, security, and business data, offering scalable data processing capabilities. Additionally, Dynatrace has expanded its collaboration with Amazon (NASDAQ:AMZN) Web Services (AWS) to provide enhanced AI-driven insights, focusing on cloud migration and security. This partnership is intended to improve business outcomes by integrating observability and cybersecurity on a single platform.
BMO Capital Markets recently adjusted its price target for Dynatrace, lowering it to $60 from $70, while maintaining an Outperform rating. This change reflects the current valuation trends in the software sector and macroeconomic uncertainties. Conversely, Stifel raised its price target for Dynatrace to $69 from $65, citing strong customer uptake of new modules like log management and application security. The firm maintains a Buy rating, indicating confidence in Dynatrace’s growth trajectory.
Moreover, Dynatrace has integrated with Edge Delta to enhance telemetry data management, aiming to optimize data processing and reduce costs. This collaboration is expected to improve query performance by filtering and optimizing telemetry data before ingestion. These recent developments highlight Dynatrace’s ongoing efforts to innovate and expand its capabilities in the rapidly evolving tech landscape.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.