Canaccord Genuity trimmed its price target on Datadog (NASDAQ: DDOG) to $185 from $210 and left its Buy recommendation intact. At the time of the Canaccord note, Datadog was trading around $129.67, with analyst targets across the street ranging from $121 to $260, according to InvestingPro data.
The brokerage acknowledged that Datadog has delivered accelerating top-line performance for a third straight quarter, with revenue up 29% year-over-year in the quarter and 28% for the fiscal year. InvestingPro data corroborates the strong revenue trajectory, showing a 27.68% increase in the past twelve months to $3.43 billion, supported by near-80% gross profit margins.
Datadog's product mix continues to scale: the Infrastructure, APM, and Logs businesses each now generate in excess of $1 billion in annual recurring revenue. Canaccord also highlighted the company’s traction in the AI market, noting that 14 of the top 20 AI-native companies deploy Datadog services. The firm pointed to 19 AI-native customers now spending $1 million or more annually, including an eight-figure agreement with a major model provider that the note identified as believed to be Anthropic.
For fiscal year 2026, Datadog guided to roughly 19% revenue growth. Canaccord reminded investors of the company's track record of conservative initial guidance: last year Datadog issued guidance for 18.7% growth but finished the year at 27.7% growth.
Despite lowering its target, Canaccord described Datadog as a "core software holding" with a "Rule of 55+" profile and maintained that the company warrants a reasonable valuation when viewed through a free cash flow lens. The updated target implies roughly 13 times calendar-year 2027 estimated sales and 46 times calendar-year 2027 estimated free cash flow, per Canaccord's calculations.
Market valuation metrics remain elevated by common measures. InvestingPro shows Datadog trading at a price-to-earnings ratio of 368 and a price-to-book of 12.25, underscoring the premium investors are placing on future growth and profitability.
Datadog's most recent reported quarter - fourth-quarter 2025 - beat estimates on both the top and bottom lines. The company posted earnings per share of $0.59 versus a consensus forecast of $0.55, and revenue of $953 million compared with a $917.01 million estimate. Brokers reacted with differing adjustments to price targets and ratings following the results and guidance.
Rosenblatt reiterated a Buy rating and set a $185 price target, highlighting that Datadog's 29% Q4 revenue growth outpaced both their internal forecast and consensus. TD Cowen moved in the opposite direction on the target line by raising its price objective to $215 from $200, citing accelerating revenue and stronger core growth metrics.
Other firms adjusted targets downward while keeping constructive stances on the name. Raymond James cut its price target to $170 from $205 but maintained an Outperform rating, noting upside across key metrics in the quarter. BMO Capital trimmed its target to $165 from $170, pointing to Datadog's fiscal 2026 revenue guidance as below consensus yet higher than buy-side expectations.
Collectively, these moves illustrate a spectrum of analyst views: the company’s recent results and AI-related customer wins underpin continued optimism, while near-term guidance and premium valuation multiples leave room for differing interpretations among sell-side firms.
Key points
- Canaccord lowers Datadog price target to $185 from $210 but keeps a Buy rating, citing a prudent outlook and attractive free cash flow valuation measures.
- Datadog reported accelerating revenue growth - 29% year-over-year in the quarter and 28% for the year - with InvestingPro data showing 27.68% growth to $3.43 billion over the last twelve months and near-80% gross margins.
- Analysts' reactions vary after Q4 results and FY2026 guidance: Rosenblatt and TD Cowen raised or reiterated targets, while Raymond James and BMO trimmed theirs, reflecting mixed interpretations across the technology and software sectors.
Risks and uncertainties
- Valuation risk - Datadog trades at elevated multiples, including a P/E of 368 and Price/Book of 12.25, which could amplify downside if growth slows; this primarily affects equity investors in software and cloud infrastructure names.
- Guidance sensitivity - Fiscal 2026 revenue guidance of about 19% is below prior outperformance and has prompted some analysts to reassess targets, creating uncertainty for market expectations in the cloud monitoring and observability market.
- Analyst divergence - Mixed post-earnings reactions across brokerages signal differing interpretations of Datadog's trajectory, which could increase stock volatility in the short term for market participants focused on tech and AI exposure.
Note: This piece reflects the facts and analyst commentary provided in the company and broker reports cited; it does not introduce additional data or external commentary beyond those items.