Wall Street's consensus estimates for Datadog's 2024 revenue growth are too high, says an analyst who on Monday downgraded DDOG stock to neutral.
On the stock market today, Datadog stock fell 3.9% to close at 90.73 following the downgrade from Bank of America analyst Koji Ikeda.
According to FactSet, analysts project 23% revenue growth to $2.53 billion in 2024 for Datadog. However, Ikeda estimates 2024 revenue of $2.4 billion, 5% lower. Ikeda estimates 2025 revenue of $2.9 billion, 12% below Wall Street estimates.
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"We view upside as likely capped as conservative demand, competitive threats and meaningful AI tailwinds likely come in second half 2024, constraining the growth profile," Ikeda said in a report.
"Furthermore, Datadog is widely perceived to be a premium offering, which could drive the end-market to lower cost competitors, native (cloud) hyperscaler offerings and/or open-source alternatives."
Meanwhile, DDOG stock has gained 28% in 2023. But the stock fell in early August after Datadog issued a weak third quarter fiscal 2023 outlook.
Datadog operates a monitoring and analytics platform for software developers and information-technology departments. Also, Datadog has a partnership with Amazon Web Services, the cloud computing unit of Amazon.com.
According to IBD Stock Checkup, DDOG stock holds a Relative Strength Rating of 90 out of a best-possible 99.
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