Datadog’s Robust Growth Amid Margin Pressures: A Hold Rating Analysis

Analyst Sanjit Singh of Morgan Stanley maintained a Hold rating on Datadog (DDOG – Research Report), retaining the price target of $115.00.

Sanjit Singh has given his Hold rating due to a combination of factors influencing Datadog’s current market position. The company’s revenue growth remains robust at 25%, driven by stable usage trends and a significant contribution from AI-native customers. This growth is supported by the increasing adoption of Datadog’s platform, with a notable rise in customers using multiple products, which indicates a strong resonance of their platform consolidation strategy.
However, despite these positive growth indicators, there are concerns regarding the company’s margins, which have been revised downwards due to factors such as foreign exchange impacts, recent acquisitions, and lower cloud gross margins. While there is optimism that these margin pressures might be temporary, the current financial outlook suggests that the stock may remain range-bound. Therefore, the Hold rating reflects a cautious stance, acknowledging both the potential for long-term benefits from AI advancements and the near-term challenges in margin performance.

Singh covers the Technology sector, focusing on stocks such as Appian, Domo, and Datadog. According to TipRanks, Singh has an average return of 0.0% and a 49.39% success rate on recommended stocks.