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Investing.com - Jefferies raised its price target on Datadog (NASDAQ:DDOG) to $160 from $135 while maintaining a Buy rating, citing intact long-term growth drivers despite near-term fluctuations. According to InvestingPro data, analysts maintain a bullish consensus on the stock, with price targets ranging from $105 to $200.
The cloud monitoring company’s stock has gained 30% since May 6, outperforming the iShares Expanded Tech-Software Sector ETF (IGV), which rose 11% in the same period. Datadog’s inclusion in the S&P 500 has supported this recent performance, though the stock remains down 4% year-to-date.
Jefferies identified three key investor focus areas: sustainability of mid-20s growth, potential revenue volatility from OpenAI, and margin recovery. The firm noted that if Datadog delivers its average beat of $23 million in the second quarter, implied growth would be approximately 26% year-over-year. This aligns with the company’s current revenue growth rate of 25.5%, as reported by InvestingPro, which also notes that earnings are expected to grow this year.
While OpenAI’s spending reduction remains an overhang, Jefferies views this as a one-off customer optimization rather than a trend. The firm pointed to rebounding expansion rates in the high-110% range and reaccelerating RPO growth of 34% in the first quarter as indicators of durable growth.
Jefferies believes positive cloud demand represents a more significant tailwind for Datadog than potential OpenAI headwinds, describing the company as "a quality growth story with solid fundamentals and steady market share gains."
In other recent news, Datadog is gearing up for its second-quarter 2025 earnings report, with UBS reaffirming its Buy rating and setting a price target of $165. Stifel maintains a Hold rating with a $135 price target, anticipating a significant revenue boost from increased OpenAI usage, potentially pushing growth into the high-20% range. TD Cowen has raised its price target from $150 to $170, expecting Datadog to exceed its 23% growth guidance and possibly revise its full-year outlook. The firm cites strong demand for observability products and potential market share gains.
Additionally, Datadog is reportedly in acquisition talks with Israel-based Upwind, a move estimated at $1 billion, which would be its largest acquisition to date. Cantor Fitzgerald has reiterated an Overweight rating and a $171 price target amid these discussions, indicating potential expansion in the cloud security market. This acquisition aims to enhance Datadog’s focus on cloud-native applications and infrastructure. These developments reflect a strategic period for Datadog, with significant attention from major analyst firms.
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