Datadog Inc (NASDAQ:DDOG) isn’t worth worrying about if you have a long-term view, according to the latest comments from stockbroker Wedbush, which retains an 'Outperform' rating for the Nasdaq-listed shares.
Datadog stock dropped US$5.72 or 6.45% in Thursday’s deals to trade at $83 after its fourth-quarter earnings left investors disappointed.
The provider of services and analytics for cloud computing made a $29 million net loss on $469 million of revenue, which beat market consensus forecasts for $450 million, and, it reported adjusted earnings per share at $0.26, beating expectations for $0.19.
"We are proud of our strong execution in fiscal year 2022, with 63% year-over-year revenue growth, $418 million in operating cash flow, and $354 million in free cash flow,” said chief executive and co-founder Olivier Pomel.
Looking ahead, however, the company's ‘conservative’ guidance for the first quarter in theory leaves only a slight chance of quarter-on-quarter revenue growth.
Datadog set its guidance between $466 million and $470 million for revenue and $0.22 to $0.24 per share earnings – undershooting analyst consensus pitched at $484 million and $0.24 respectively.
“DDOG reported a good quarter, but the beat was a bit lighter as slower growth in usage among its larger customers impacted the momentum in the quarter,” Wedbush analyst Taz Koujalgi said in a note.
The analyst added: “Overall, the quarter was impacted by usage slowdown which was not surprising given the trends that are being seen by large cloud providers, but we remain positive on the long-term opportunity given the expanding product portfolio, large tail of customers with low average spend, FCF support and good execution history”
Wedbush has an ‘outperform’ rating for the stock with a 12-month price target of $101, suggesting some 16% upside to the current price.