DataDog Is The 'Next High-Quality Large-Cap Stock,' Says Analyst

Zinger Key Points
  • Bank of America analyst Koji Ikeda upgraded DataDog to a Buy rating in a report issued Thursday.
  • The analyst is encouraged by the company's operational strength, recent results and forays into artificial intelligence.

Cloud-based analytics company DataDog Inc DDOG has consistently exceeded earnings estimates, reflecting the company’s sustained growth. Encouraged by the company’s recent performance, with artificial intelligence as a catalyst and its platform’s value proposition, one Bank of America analyst is optimistic that the company can beat Wall Street estimates.

DataDog Analyst: Bank of America analyst Koji Ikeda upgraded DDOG from Neutral to Buy, raising its price target from $143 to $155 in a note on Thursday.

DDOG Takeaways: Ikeda views DataDog as the “next high-quality large-cap stock.”

“Datadog helps organizations monitor application and infrastructure performance to ensure high quality end-user experiences. As discussed in our initiation report, we estimate this to be a $53bn opportunity,” the analyst said. “Datadog has a robust platform with 22 products. Its value proposition is attractive for spend consolidators and…those who are yearning for bleeding edge tech.”

Ikeda noted that recent quarterly results have been promising. The analyst pointed to website clicks and new spending activity by existing customers to indicate future revenue growth potential. He noted that the company’s conservative guidance and “beat-and-raise performance” could drive stock appreciation.

Finally, the analyst cited the company’s upcoming AI conference as a catalyst.

“We believe its customer conference DASH (June 25-26), is the next catalyst. We are expecting to hear how Datadog is becoming even better positioned in the next generation AI theme,” Ikeda said. “We believe this is only the beginning of Datadog’s AI journey. And, AI will likely be a meaningful growth driver.”

DDOG Price Action: DataDog traded at $118.58, down 2.5% at the time of publication Thursday.

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