Analysts at Morgan Stanley and Needham offered up a vote of confidence in Datadog's (DDOG) - Get Report future prospects, but shares declined Friday as the cloud monitoring and data analytics company predicted a loss for the current quarter.
Morgan Stanley analysts Sanjit Singh and Keith Weiss touted Datadog's "pole position" status in the seismic shift of IT services from individual data centers to the cloud. The analysts pointed to Datadog's "impressive" billing during the fourth quarter, which, at $131 million, represented a 78% increase from the same quarter a year ago.
Still, while praising Datadog's fourth-quarter performance - with the software developer having posted an earnings beat along with an 85% surge in revenue - the Morgan Stanley analysts noted they were maintaining their equal-weight rating.
The analysts urged investors to wait for an opportunity to buy Datadog shares at a lower price, noting the company's stock valuation already "fairly" incorporates "growth and unit economics at current levels."
Even so, Morgan Stanley boosted its price target on Datadog to $50 a share, up from $48 previously.
"Datadog has positioned itself as the leading observability platform for the most modern cloud environments," Morgan Stanley's Singh and Weiss wrote.
Analysts at Needham staked out a more bullish position, hiking their price target to $65 a share, up from $54 previously.
Investors, however, reacted negatively on Friday to Datadog's guidance for the current quarter, which forecasts a loss of $5 million to $7 million, or 1 to 2 cents a share, as the New York-based tech company invests in new products.
Shares of Datadog fell 3.59% to $46.76 a share.