Datadog falls as Monness, Crespi, Hardt downgrades, citing 'cautious' Q3 outlook
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Datadog (NASDAQ:DDOG) shares fell on Thursday after it issued a tepid outlook for the third-quarter amid a strong second-quarter, prompting investment firm Monness, Crespi, Hardt to downgrade the cloud computing company. 
Analyst Brian White lowered his rating on Datadog (DDOG) shares to neutral from buy, noting that the "cautious" guidance for the third-quarter may be just the start of things to come. 
"Given our concern that this downturn may be in the early stages of impacting Datadog, we are stepping to the sidelines, downgrading the stock to a Neutral rating from a Buy," White wrote in a note to clients.
The analyst added that the long-term outlook for Datadog (DDOG) is strong, citing the cloud computing and digital transformation trends, but with the economy looking like it may go into a recession and turmoil in the equity markets, the near-term could be difficult.
Datadog (DDOG) shares fell more than 5.5% to $106.09 in mid-day trading, hurt in part by the weak outlook from cyber security company Fortinet (FTNT).
In addition, White noted that the Datadog (DDOG) conference call had a "darker tone" than in the past, adding that it was "much more cautious and defensive," as the company called out softer trends in some areas, including consumer discretionary.
"Given the precarious geopolitical landscape and treacherous economic environment, we believe Datadog will face headwinds over the next 12-18 months," White explained. 
The analyst lowered his estimates for the third-quarter to $425.8M in sales, down from a prior estimate of $437.8M. He also cut his earnings per share outlook to $0.22 from $0.24.
Datadog (DDOG) said it expects revenue to be between $410M and $414M, with earnings between $0.15 and $0.17 per share.
White also lowered his full-year estimates, with 2022 sales expected to be $1.677B, down from a prior outlook of $1.695B, while EPS was chopped to $0.94 from $1 per share.
Datadog (DDOG) expects sales to be between $1.61B to $1.63B and earnings per share between $0.74 and $0.81 per share, compared to a prior outlook of $1.6B-1.62B and earnings per share between $0.70 and $0.77. 
Separately, on Thursday, Datadog (DDOG) said it acquired Seekret to make application programming interfaces more observable. 
Analysts are largely positive on Datadog (DDOG). It had an average rating of BUY from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates DDOG a HOLD.