© Reuters. Datadog (DDOG) can expand TAM to $58bn, BMO Capital initiates at outperform
Datadog, Inc. (NASDAQ:) was initiated with an Outperform rating and a $140 per share price target at BMO Capital on Tuesday, with analysts noting the company’s cloud and consolidation tailwinds.
The firm is positive on the underlying fundamentals of the observability sector and believes Datadog and Dynatrace will consolidate spend as the category expands.
“We think Datadog’s core 2026 TAM is approximately $24 billion, and including large adjacent opportunities expands the TAM to approximately $58 billion,” the analysts explained.
“Moreover, we believe the dynamics of the cloud market have meaningfully improved in the past few quarters, which should help with Datadog’s revenue growth in CY24 and beyond,” they added.
Given the current valuation, BMO placed Datadog in its Tier 3 of Outperform-rated stocks. However, they noted that for the stock to work, they feel CY24 consensus estimates will have to move higher throughout the year.
