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Investing.com - Guggenheim upgraded Dynatrace Inc. (NYSE:DT) from Neutral to Buy on Wednesday, setting a price target of $66.00, which represents approximately 25% upside potential. The software monitoring company, currently valued at $15.9 billion, maintains a "GREAT" financial health score according to InvestingPro analysis.
The upgrade comes as Guggenheim expresses increased confidence that key catalysts for Dynatrace’s business are gaining momentum, coupled with what it describes as a favorable model setup. The company’s impressive 81.9% gross profit margin and 18.8% revenue growth over the last twelve months support this positive outlook.
Channel checks by the firm indicate increased usage of Application Performance Monitoring (APM) and consolidation of observability tools onto Dynatrace’s platform, including log management, which are collectively driving overages and sizable early renewals.
These catalysts support Guggenheim’s subscription revenue growth estimate of at least 17% constant currency for fiscal year 2026, compared to the company’s guidance of 14-15% growth. The firm believes this is achievable assuming approximately 10% year-over-year Net New ARR growth versus guidance implying a 4% decline.
Guggenheim also notes that a solid start to the year with better-than-usual April seasonality and incremental guidance conservatism, both according to management, could yield additional upside, as could improving go-to-market momentum.
In other recent news, Dynatrace reported strong fourth-quarter fiscal year 2025 results, with a 1% increase in Annual Recurring Revenue and a 3% rise in Subscription Revenue, both exceeding consensus estimates. Goldman Sachs responded by raising its price target for Dynatrace to $64, citing the company’s improved operational and free cash flow margins. Truist Securities maintained a Buy rating with a $70 price target, following discussions with Dynatrace’s CFO about their business strategies and the positive reception of their platform strategy. Stifel also reiterated a Buy rating, noting the company’s shift towards an On-Demand-Consumption model and its resilience amid potential economic headwinds.
Additionally, Dynatrace announced the opening of its new corporate headquarters in Boston, located in a LEED Platinum-certified building. The company also adopted a new majority voting standard for director elections, enhancing its governance practices. These developments reflect Dynatrace’s ongoing efforts to strengthen its market position and operational framework.
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