Dynatrace Analysts Lay Out Bull Case

Dynatrace Inc DT began trading on the public market earlier this month, and on Monday two Street analysts began coverage of the software intelligence platform company with bullish ratings.

The Analysts

RBC Capital Markets analyst Matthew Hedberg initiated coverage of Dynatrace with an Outperform rating and $28 price target.

KeyBanc Capital Markets analyst Rob Owens initiated coverage of Dynatrace with an Overweight rating and $30 price target.

RBC: Software That 'Works Perfectly'

Dynatrace is focused on creating software that "works perfectly" with the modern economy, Hedberg said in a Monday initiation note. 

Some legacy applications created in the early 2000s are now cracking under today's cloud-based architecture, the analyst said, while Dynatrace is designed for the modern hybrid-cloud. It stands out in three unique ways, he said: 

• Dynatrace is installed as a single agent, OneAgent, which is able to automatically configure itself and discover all components of the full stack to allow high fidelity and web-scale data capture.
• The company offers an all-in-one approach that lowers the need for disparate tools, which allows for customers to improve their productivity and reduce operating costs.
• Dynatrace's deterministic artificial intelligence is able to learn normal performance thresholds to offer solutions when performance deviates from desired conditions.

The company should be able to leverage its full-stack suite of solutions and expand to markets beyond APM, with the potential to disrupt IT spending categories like infrastructure monitoring, according to RBC. 

KeyBanc: Sizing Up Market Opportunity

Dynatrace is positioned to take advantage of digital transformation and cloud migration trends, which represent a total addressable market of $18 billion, Owens said in a Monday initiation note.

The company has solidified its position as being a "best-in-class" company that offers comprehensive software intelligence solutions, the analyst said. 

Encouragingly, the company showed 232% year-over-year growth in its Dynatrace platform ARR in fiscal 2019 and 44% year-over-year total ARR growth, Owens said. 

"We see Dynatrace as a unique opportunity to play trends in enterprise cloud growth and the systems that are becoming more necessary to manage complex enterprise systems." 

Price Action

Dynatrace shares were up 0.13% at $23.93 at the time of publication Monday. 

Related Links:

Dynatrace Holdings IPO: What You Need To Know

Benzinga's Top Upgrades, Downgrades For August 26, 2019

Public domain photo via Wikimedia.