Shares of Datadog (NASDAQ:DDOG) are rising Thursday after Stifel analyst Brad Reback upgraded Datadog from Hold to Buy and lowered the price target from $205 to $160, citing recent checks that suggest accelerating core growth.
Focus On Core Offerings
Last quarter, Datadog’s core, non-genAI, revenue growth accelerated to 20% year-over-year. New logo annualized bookings also more than doubled, and fueled Reback’s belief that management will maintain this level of S&M investment.
Reback also said that new products like CloudPrem, DEX, Security, Service Management, Bits AI and other newer go-to-market initiatives around enterprise and international should begin to supplement Datadog’s existing revenue base.
Watching The Competition
Reback added that Palo Alto’s acquisition of Chronosphere and Snowflake‘s recent acquisition of Observe play into a negative narrative around the crowding in the observability space and that pricing will continue to broadly compress. However, the near-term impact on Datadog will be limited, according to Reback. Over the medium term, he noted that Datadog has effectively worked with customers to ensure value based pricing.
Looking Ahead To Earnings
Reback expects Datadog to beat earnings expectations by about 4%. Datadog reports earnings in early February, and Reback put the 2026 full year core revenue estimate at $3.72 billion and full-year total revenue estimate of $4.08 billion, roughly in-line with consensus of $4.1 billion. Reback believes the valuation appears attractive given the accelerating core growth.
According to Benzinga Data, analysts expects earnings-per-share to come in at 56 cents. Analysts see revenue of $916.74 million. Datadog has a strong historical earnings beat track record, according to Benzinga Pro.
DDOG Stock Is On The Rise
DDOG Price Action: Datadog shares were up 7.05% at $132.17 at the time of publication on Thursday, according to Benzinga Pro data.
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