By Sam Boughedda
Piper Sandler analysts initiated Datadog Inc (NASDAQ:DDOG) at Neutral with a $72 price target in a note Tuesday, stating near-term cloud headwinds weigh on the potential upside for the stock.
The analysts told investors DDOG has "built the preeminent cloud-focused observability platform" with "its 17 modules helping the company sustain a >130% NRR at nearly $2B in scale."
"We believe DDOG's track record of organic and inorganic innovation alongside its efficient GTM strategy will help the company remain a leading cloud-vendor for years to come," they added. "However, we believe longer-term consensus expectations that call for a multi-year acceleration past 2023 have diverged from IaaS expectations, and the level of upside to guidance in 2023 may be less than many are looking for, driving minimal/negative leverage in the model while investor preferences continue to favor improving profitability stories."
While Piper Sandler acknowledged that "the Rule of 80+ profile ranks among the best" in its coverage, at ~9x CY'24E revenue, they feel shares leave little room for upside.