Key Takeaways
- Datadog shares rose 5% today after BofA raised its price target to $335 from $305 and kept its Buy rating.
- The rise follows Thursday’s 4% drop, which came after a report that Datadog had offered nearly $4 billion for cloud security startup Upwind.
- Datadog had $5 billion of cash and marketable securities at the end of June, which is more than the reported price, so it can afford the deal.
- Third-quarter results on Nov. 4 are the next test, against revenue guidance of $1.14 billion at the midpoint.
Datadog (DDOG) is up 5% today. Before the open, BofA analyst Koji Ikeda kept his Buy rating and raised his price target to $335 from $305 ahead of third-quarter earnings.
That’s a better mood than Thursday’s, when shares fell 4% on news that Datadog wants to buy its way further into cloud security.
The Upwind bid
The Information reported on Thursday that Datadog had offered nearly $4 billion for Upwind Security, an Israeli cloud security startup. Upwind hasn’t accepted. It’s also reportedly closing a $300 million funding round at a valuation of about $3.8 billion, so Datadog’s offer is barely above what private investors are paying.
Today’s rise wasn’t only about Datadog, either. Other security stocks rallied this morning too.
Datadog can afford it
Nearly $4 billion is a big check. But Datadog ended fiscal 2025 with $4.48 billion of cash and short-term investments, against $1.28 billion of debt…
By June 30, 2026, that cash pile had grown to $5 billion. Free cash flow keeps adding to it: it passed $1 billion in fiscal 2025, up from $277 million in 2021.
TIKR tracks 48 analysts on Datadog. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Datadog, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Datadog’s Analyst Ratings
Nov. 4 is the real test
Datadog reports before the open on Wednesday, Nov. 4. It has guided to third-quarter revenue of $1.14 billion at the midpoint, which would be growth of about 29%. That’s down from 36% in the second quarter, after management said its largest customer started using less of the platform in the third quarter.
The stock isn’t cheap going into the report. At Thursday’s close it traded at 97x forward earnings, below its five-year average of 106x but about double its February low of 47x…
At this morning’s price, it’s closer to 102x.
My take: Thursday’s selloff over Upwind looks overdone. Datadog can pay for the deal out of cash it already has, at barely more than Upwind’s own private valuation. BofA’s $335 target, though, needs earnings estimates to keep rising, so Datadog has to beat its guidance on Nov. 4 and raise it.
Of course, there’s no deal yet. Upwind hasn’t said yes, and a higher bid would change the math.
So what is Datadog stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
