In a report released yesterday, Sanjit Singh from Morgan Stanley maintained a Hold rating on Dynatrace (DT – Research Report), with a price target of $55.00.
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Sanjit Singh has given his Hold rating due to a combination of factors influencing Dynatrace’s performance. The company has shown stable demand with a consistent 20% year-over-year growth in subscription revenue, which aligns with investor expectations. However, the constant currency annual recurring revenue (ARR) growth has slowed for the third consecutive quarter, and net-new ARR has declined, indicating some challenges in maintaining growth momentum.
Sanjit Singh notes that while there is potential for growth in areas like Logs and DPS adoption, the guidance for fiscal year 2026 is conservative, with expected ARR and subscription revenue growth slightly below investor expectations. The valuation of Dynatrace is also a consideration, as the firm seeks more confidence in the company’s ability to sustain over 20% subscription revenue growth amidst an uncertain environment. These factors contribute to the decision to maintain a Hold rating.