Overview
Stifel has reduced its price target on Dynatrace Inc. to $51.00 from $63.00 but kept its Buy rating on the shares. The analyst revision comes as Dynatrace reported third-quarter fiscal 2026 results that outpaced expectations and delivered several operational milestones.
Results and immediate market reaction
Dynatrace’s third-quarter performance produced an approximate 8% intraday share uptick following the release of the results. The company reported earnings per share of $0.44 versus a consensus forecast of $0.41, and revenue of $515 million compared with an expected $505.8 million. Management also raised ARR guidance, with the firm increasing Annual Recurring Revenue guidance by about 125 basis points for the March quarter.
Customer and product metrics
On the customer-growth front, Dynatrace recorded record new logo ARR growth of 21% year-over-year. Stifel highlighted that expansion ARR has stabilized, with a net retention rate of 111% for the third consecutive quarter. The firm also noted that close rates remained consistent with levels seen in the first half of the fiscal year.
Operational usage metrics showed continued momentum: Dynatrace surpassed $100 million in annualized Logs consumption, and Dynatrace Platform Services usage growth continued to exceed 20%.
Guidance and capital allocation
The company increased its fiscal year 2026 guidance across all reported metrics. In addition to raising outlook, Dynatrace announced a new share repurchase program of approximately $1 billion, which is twice the size of its previous repurchase program.
Analyst responses beyond Stifel
Other firms adjusted their views in the wake of Dynatrace’s results. TD Cowen raised its price target to $60 and maintained a Buy rating. BMO Capital moved its price target to $45 while retaining an Outperform rating, noting valuation compression as part of its rationale. Raymond James reiterated a Market Perform rating, stressing the importance of ARR coming in above expectations.
Forward-looking comments from Stifel
Although Stifel trimmed its price target, the firm expects ARR and subscription growth rates could potentially trend higher beginning in fiscal year 2027.
Key takeaways
- Stifel cut its price target on Dynatrace to $51 from $63 but kept a Buy rating.
- Dynatrace beat quarterly EPS and revenue estimates and increased ARR guidance for the March quarter by roughly 125 basis points.
- The company announced an expanded $1 billion share repurchase program and reported growth milestones in Logs consumption and platform services usage.
Sectors affected
- Software and enterprise cloud services
- Technology and business services tied to application performance and observability
Risks and uncertainties
- Valuation sensitivity - As noted by BMO Capital, valuation compression can affect target-setting and investor returns in the software sector.
- Dependence on continued ARR growth - Several analysts highlighted the importance of ARR exceeding expectations; slower-than-expected ARR could alter analyst outlooks and market reaction.
- Execution on usage and subscription growth - While platform services usage and Logs consumption have shown strong growth, sustaining these metrics is necessary to meet raised guidance and future growth expectations.
This article reports verified analyst actions and the company’s disclosed financial and operational results.