Shares of the New York company were falling 4.8% to $112 in premarket trading.
Datadog reported fourth-quarter earnings of 6 cents a share, beating Wall Street's call for 2 cents a share, while revenue climbed 56% to $178 million, exceeding analysts' forecast for $163.6 million.
The company also announced that it had acquired two startups, Sqreen and Timber Technologies.
For full-year 2021, Datadog expects earnings of 12 cents a share at the midpoint of its guidance range and revenue of $830 million. Analysts had projected adjusted profit of 19 cents on revenue of $802.4 million.
Barclays analyst Raimo Lenschow, who kept an overweight rating on the stock, raised his price target to $135 from $117 a share and said "Datadog delivered a strong finish to FY20 with strong top-line beat and another quarter of healthy underlying leverage."
"FY21 guidance is calling for meaningful growth deceleration, which we believe reflects management conservatism given the continued macro uncertainty," Lenschow said in an investors' note.
Morgan Stanley analyst Sanijit K. Singh raised his target to $120 from $112, saying that "closing 2020 with 56% rev growth supported by customer expansion returning to pre-pandemic levels and record new logo additions suggests momentum heading into 2021."
"However, initial guidance calling for 37-38% growth, while conservative, likely isn't enough to fuel shares higher at 34x CY22 sales," said Singh, who rates the stock equal-weight. "Guidance reflects ongoing impact from slower customer expansions in 2020, tougher 1H compares and some conservatism on the spending environment in 2021."
Jefferies analysts rate the stock a buy and raised their price target to $140 from $125, saying fundamental trends look strong and the full-year outlook "is likely to prove to be conservative."
The analysts said that “cross-sell metrics are demonstrating healthy uptake” and added that they "would use any weakness as a buying opportunity."