Datadog's Q3 Earnings Success Sparks Analyst Optimism, Hints At Bullish Tech Market Recovery

Shares of Datadog Inc DDOG were retracing on Wednesday, after spiking around 30% in the previous trading session on upbeat third-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Truist Securities On Datadog

Analyst Joel Fishbein maintained a Buy rating, which raised the price target from $110 to $120.

Datadog seems to have found “their footing in Q3, delivering a strong beat and raise, signaling confidence heading into the end of the year,” Fishbein said in a note.

The quarter reflected moderation in optimization trends, which is a sign that the company “may have navigated the worst of the spending rationalization trends,” the analyst stated. "Though headwinds remain, we are constructive about the opportunity for incremental growth from their core offering, new products, and developing customer verticals that we believe could drive upside to expectations going forward," he added.

RBC Capital Markets On Datadog

Analyst Matthew Hedberg reiterated an Outperform rating, while lifting the price target from $103 to $120.

Datadog reported strong quarterly results, beating estimates, “driven by improving usage trends,” Hedberg said. Adding that the company's 2023 guidance “moved higher by more than the beat.”

“While we believe there is an opportunity for growth to accelerate, guidance likely starts conservative and builds higher through the year as we don't see CY/24 estimates at risk at this point,” the analyst further stated.

Check out other analyst stock ratings.

Wedbush On Datadog

Analyst Taz Koujalgi reaffirmed an Outperform rating and price target of $120.

Datadog delivered the strongest revenue beat of the year in the third quarter and raised the full-year revenue guidance by more than the beat, Koujalgi stated. The company added “a record number of new logos above 100K,” he noted.

"The Q4’23E revenue guide implies ~$20m dollars added q/q, even lower than what it added on Q2’23 and Q3’23 and hence appears conservative," the analyst further wrote.

Guggenheim Securities On Datadog

Analyst Raymond McDonough maintained a Neutral rating on the stock.

“Datadog reported a strong beat and raise in 3Q23 with results also implying stronger growth in 2024 than we originally anticipated,” McDonough wrote in a note.

“As such, if we model similar New Business momentum in 4Q and throughout 2024 we see a plausible case where revenue exits 2023 growing 25% (approximately 4% above 4Q guidance) and ends 2024 growing between 24-25%,” he added.

KeyBanc Capital Markets On Datadog

Analyst Michael Turits reiterated a Sector Weight rating on the stock.

Usage growth rebounded to the levels seen in the first quarter, Turits said. Although optimization continued, the “intensity and breadth” seems to be moderating, he added.

“Contribution from next-gen AI natives increased to 2.5% from 2.0% of ARR q/q, made up primarily of AI model providers, with the larger part of that usage on Azure,” the analyst wrote. “They indicated broad usage on AI application functionality but still early and at low volumes,” he added.

DDOG Price Action: Shares of Datadog were down 1.9% to $100.25 at the time of publication Wednesday.

Now Read: Why This Lucid Analyst Is Bullish On The EV Maker Despite Q3 Disappointment

Photo: Shutterstock