Citizens kept its Market Perform rating on Datadog (NASDAQ:DDOG) on Wednesday, reiterating a cautious stance even as the stock recently rose sharply. Over the last week the shares advanced 12.06%, while valuation metrics remain elevated - the stock is trading at a price-to-earnings ratio of 367.77, according to the data cited by the analyst.
The firm said it was "impressed by Datadog's growth across its three observability pillars - infrastructure monitoring, application performance monitoring (APM), and log management - with each surpassing $1 billion in annual recurring revenue (ARR)." Citizens further highlighted an "acceleration of our core APM product into the mid-30s y/y" and noted that Datadog delivered "over 400 new features and capabilities" in 2025.
Citizens also pointed to a material new contract as evidence of demand, describing a "new eight-figure deal with an AI company" as a positive development for the observability platform provider.
Despite these strengths, the analyst called out potential headwinds. One concern is customer concentration among leading AI research labs. The firm also underscored the intensity of competition in observability: "20 players in the Gartner Magic Quadrant for Observability" and new entrants such as Palo Alto Networks (NASDAQ:PANW), which has moved into the space through its acquisition of Chronosphere.
Following Datadog's latest results and forward guidance, several firms refreshed their views and price targets. The company reported 29% year-over-year revenue growth for the third consecutive quarter, and reiterated that infrastructure, APM and Logs each exceeded $1 billion in ARR. TD Cowen responded by raising its price target for Datadog to $215, citing revenue growth that beat expectations by 4%.
Other brokerages trimmed targets even as they maintained positive or constructive stances. Scotiabank lowered its target to $160, noting Datadog's strong 2026 revenue guidance that exceeded buy-side expectations. Canaccord Genuity cut its target to $185, pointing to a more conservative growth outlook. BMO Capital set its target at $165, describing guidance that was below consensus but above buy-side expectations. Raymond James adjusted its target to $170, acknowledging positive fourth-quarter results and guidance slightly above market consensus for 2026.
These moves illustrate differing interpretations among analysts of Datadog's growth trajectory and valuation. Citizens' Market Perform call balances recognition of robust product and ARR momentum against concerns about concentrated customers, an elevated valuation multiple and a crowded competitive set.
Summary of facts contained in this report:
- Citizens reiterated Market Perform on Datadog.
- Datadog shares rose 12.06% over the past week while trading at a P/E of 367.77.
- Infrastructure monitoring, APM and log management each surpassed $1 billion in ARR.
- Citizens cited an "acceleration of our core APM product into the mid-30s y/y" and "over 400 new features and capabilities" delivered in 2025.
- Company closed a new eight-figure deal with an AI company, according to the analyst's note.
- Analysts' price-target moves: TD Cowen $215; Scotiabank $160; Canaccord Genuity $185; BMO Capital $165; Raymond James $170.