Cantor Fitzgerald has reiterated its Neutral rating on Dynatrace Inc. (NYSE: DT) and maintained a $37.00 price target, saying the vendor continues to win large consolidation engagements as customers consolidate observability spending.
The current share price of $36.87 sits a hair below Cantor Fitzgerald's stated target. InvestingPro data cited alongside the note highlights Dynatrace's notably high gross profit margin of 81.75% as a metric suggesting potential undervaluation at current levels.
In terms of top-line dynamics, Dynatrace posted subscription revenue growth of 16% on a constant-currency basis, outpacing the midpoint of the company's guidance at 13.5%. Consumption-based revenue expansion remains even stronger - Cantor Fitzgerald notes consumption growth above 20% and consistently ahead of ARR growth. Across the last twelve months, Dynatrace's overall revenue rose by 18.2%.
The company also reached an annualized logs consumption milestone earlier than anticipated, hitting a target of $100 million a quarter. Cantor Fitzgerald described logs consumption growth as "very strong," reporting an increase of more than 100% year-over-year as customers broaden their use to include logs analysis on Dynatrace's DPS platform.
On the security front, Dynatrace told analysts that security expansion is progressing positively but will likely take longer to scale to the same level as logs consumption. Meanwhile, the firm's dollar-based net retention rate (DBNRR) remained steady at 111%.
Cantor Fitzgerald continues to frame Dynatrace as a consolidator of customer spend within an expanding observability market. The firm reiterated the $37 price target, which it says equates to 4x calendar 2027 revenue or 14x free cash flow. Cantor Fitzgerald noted it is waiting for an uptick in DBNRR and a re-acceleration of subscription revenue growth before adjusting its view.
Analyst reactions beyond Cantor Fitzgerald
Dynatrace's quarterly results prompted a range of responses from other brokerages, reflecting divergent views on valuation after the company showed stronger-than-expected new annual recurring revenue (ARR) growth driven by end-to-end observability deals.
- DA Davidson trimmed its price target to $50 from $65 but maintained a Buy rating.
- Scotiabank cut its price target to $47 from $60 and kept a Sector Outperform rating, pointing to a solid fiscal third quarter with double-digit ARR growth.
- KeyBanc raised its price target to $52 from $50, citing a third-quarter performance that exceeded its estimates by $16 million and higher guidance for the fourth quarter.
- Truist Securities reiterated a Buy rating with a $55 price target, highlighting stable growth and an improved growth outlook for the year.
- Stifel lowered its price target to $51 from $63 but left its Buy rating intact, noting record new logo ARR growth of 21% year-over-year.
These adjustments underscore differing assessments among analysts about how to balance recent consumption and ARR beats against longer-term subscription momentum and valuation multiples.
Takeaway
Cantor Fitzgerald's Neutral stance reflects a wait-and-see approach: the firm recognizes strong consumption trends, an early achievement of the logs consumption milestone, and robust gross margins, but is holding valuation steady until it sees further DBNRR expansion and a renewed acceleration in subscription revenue. Other brokerages have taken a range of positions on price targets while largely maintaining bullish ratings, demonstrating varying degrees of optimism about the sustainability and pace of Dynatrace's growth.
Note: This report focuses on analyst ratings and company-reported metrics and does not provide investment advice.