Credit Suisse: Datadog Shares Already Reflect Solid Q3 Results

Datadog Inc DDOG Tuesday reported results for the first quarter as a public company.

The third-quarter results highlighted the company’s leverage to significant tailwinds as well as the company’s ability to cross- and up-sell new platform modules, according to Credit Suisse.

The Analyst

Credit Suisse’s Brad Zelnick maintained a Neutral rating on Datadog while raising the price target from $40 to $45.

The Thesis

Datadog’s third-quarter results were both strong and ahead of expectations, while guidance also came in above expectations, Zelnick said in the note.

At $95.9 million, the company’s revenue beat Street expectations by 13%. Datadog added 133 customers in the $100K+ category, the analyst mentioned. He added that billings were also higher than the consensus estimate by 31%.

While management’s fourth-quarter guidance came in above Street expectations, it seems to be conservative, Zelnick mentioned.

He expects Datadog to continue gaining share in its core infrastructure market as well as in markets where the company has recently expanded into, which could drive annual top-line growth of 40% through 2021.

Although the company is well positioned to gain share in “a largely greenfield market,” the stock valuation already reflects “years of continued strong execution and share gains,” the analyst said.

Price Action

Shares of Datadog were up 15.55% to $39.75 at the time of publishing on Wednesday.