Datadog Inc (NASDAQ: DDOG) shares got off to a hot start on the public market following the company’s IPO in September.
After pricing its IPO at $27 per share, Datadog jumped nearly 50% on its first day of trading and has held onto most of those gains in the stock’s first month of trading.
This week, investors get their first taste of what Datadog underwriters have to say about the stock following the expiration of the company’s analyst quiet period. Here’s a sampling of what some Wall Street analysts have said so far.
Voices From The Street
Morgan Stanley analyst Sanjit Singh said Datadog’s growth trajectory is impressive, but the stock is pricing in some high expectations at current levels.
“We see the company as the clear leader in a $30+ billion opportunity, but attractive 50%+ growth looks factored in at 24x CY20 revenue,” Singh wrote in a note.
JPMorgan analyst Sterling Auty said Datadog has one of the best combinations of high growth and high margins in the entire software space.
“We now see DDOG as the best positioned to capture not only the biggest market share of infrastructure monitoring but also the opportunity from companies that look to consolidate to a single monitoring vendor,” Auty said.
JMP Securities analyst Patrick Walravens said there are plenty of things to like about Datadog’s business, but its valuation may cap near-term upside.
“We believe investors may want to wait for a better entry point to own this high-quality name as it currently trades at a premium valuation, with a CY20E EV/revenue multiple of 24.0x, and a CY21E EV/revenue multiple of 18.3x, representing an ~60% premium to our high-growth infrastructure peer group median multiple of 11.6x,” Walravens wrote.
Ratings And Price Targets
Here’s a summary of some of the early Wall Street initiations on Datadog:
- Morgan Stanley has an Equal-Weight rating and $39 target.
- JPMorgan has an Overweight rating and $45 target.
- JMP Securities has a Market Perform rating.
- William Blair has an Outperform rating.
- Goldman Sachs has a Neutral rating and $33 target.
- Barclays has an Overweight rating and $45 target.
- Stifel Nicholaus has a Buy rating and $40 target.
- Jefferies has a Hold rating and $34 target.
Datadog's stock traded down 5.6% at $33.66 per share Monday afternoon.
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