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Investing.com -- Guggenheim upgraded Dynatrace (NYSE:DT) to Buy from Neutral and set a $66 price target given growing business momentum and a favorable near-term setup as the company enters fiscal 2026.
The firm expects subscription revenue growth of at least 17% in constant currency for the year—above the company’s guidance of 14–15%—driven by stronger-than-expected demand for application performance monitoring (APM), increased adoption of log management, and rising customer overages within the company’s consumption-based model.
Recent channel checks showed that multiple partners exceeded targets in the June quarter, helped by tool consolidation and expansion activity, particularly among large enterprise clients.
Guggenheim highlighted early renewals—some triggered by overages of $50,000 or more—as a meaningful contributor to deal size uplifts.
Dynatrace’s growing log management business, expected to more than double this year to over $100 million in consumption revenue, is seen as a major revenue driver.
Partners characterized the company’s logs offering as highly competitive in performance and pricing flexibility.
The firm also pointed to improving sales productivity following go-to-market changes in fiscal 2025, with about 30% of reps under one year of tenure now maturing.
Management has introduced dedicated teams for key products and aligned compensation incentives with annual recurring revenue growth.
Despite conservative guidance assumptions—including flat year-over-year net new ARR—Guggenheim believes Dynatrace is set up for potential outperformance.
The company’s high exposure to secular themes like application modernization, observability consolidation, and AI integration is also seen as a long-term advantage.