Stifel analyst Brad Reback lowered the firm’s price target on Datadog (DDOG) to $120 from $125 and keeps a Hold rating on the shares. Datadog posted a 3% revenue beat and raised FY25 guidance by more than the beat, including a “strong” Q2 forecast, the analyst tells investors. Management lowered FY25 operating margin expectations given gross margin headwinds stemming from usage growth spikes at Datadog’s largest customer, OpenAI, that is driving higher-than-expected cloud costs, though the firm expects management will fix the issue in due course and ultimately expects gross margins to remain at 80%-plus, the analyst added.
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