Dynatrace (DT – Research Report), the Technology sector company, was revisited by a Wall Street analyst today. Analyst Sanjit Singh from Morgan Stanley maintained a Hold rating on the stock and has a $62.00 price target.
Sanjit Singh has given his Hold rating due to a combination of factors related to Dynatrace’s financial metrics and market dynamics. One of the key considerations is the shift towards a consumption-based model, which has led to a divergence between annual recurring revenue (ARR) and subscription revenue. While ARR growth has slowed slightly, subscription revenue has accelerated, driven by on-demand consumption (ODC) revenue.
Singh notes that ODC revenue, which is not included in ARR, is becoming an increasingly important metric as it reflects actual usage of Dynatrace’s software. This shift suggests that subscription revenue may become a leading indicator of the company’s growth. Despite the potential for ODC to enhance subscription revenue growth, Singh maintains a Hold rating due to macroeconomic uncertainties, although he remains cautiously optimistic about the potential for sustained growth in the coming years.
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