Friday - Monness, Crespi, Hardt has downgraded Datadog (NASDAQ:DDOG) stock, a monitoring and analytics platform for developers, IT operations teams, and business users in the cloud age, from Neutral to Sell. This change comes with a new price target of $98.00, reflecting concerns over the company's current valuation and broader market trends.
The firm cites "treacherous trends across the enterprise software complex" and disillusionment with the general AI hype cycle as key factors influencing their decision. According to the firm, these industry-wide issues are contributing to a market environment that is increasingly unforgiving of software stocks with high valuations. Datadog's recent rally has only heightened these valuation concerns, potentially setting the stage for increased selling pressure on the stock.
Despite the downgrade, the firm acknowledges the long-term potential of Datadog, noting the positive impact of ongoing cloud adoption, digital transformation, and the expansion of Datadog's product portfolio. These factors are seen as beneficial for the company's future prospects.
However, the firm's outlook remains cautious in the near term, with the belief that the "darkest days of this economic quagmire are ahead of us." This sentiment is reflected in the decision to set a 12-month price target of $98 for Datadog shares, indicating a belief that the stock may face challenges in the current economic landscape.
Investors and market watchers will be closely monitoring the performance of Datadog's stock in the wake of this downgrade and the broader context of the enterprise software sector's performance.
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