Datadog rises as Piper Sandler upgrades, citing stability,' boost from AI
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Datadog (NASDAQ:DDOG) shares rose more than 2.5% in pre-market trading on Monday as investment firm Piper Sandler upgraded the cloud software company, citing "signs of stability" as well as a boost from artificial intelligence.
Analyst Rob Owens raised his rating on Datadog (DDOG) shares to overweight from neutral, along with a $115 price target, noting that the concerns over the cloud have "largely played out" and there are "broad signs of stabilization in infrastructure and DevOps software demand." The company should also be a beneficiary from security and AI, Owens added. 
"We favor the disruptive nature of the company's solutions, think its platform play will continue to resonate and believe its best days are still ahead," Owens wrote in an investor note.
Delving deeper, Owens said that he is further encouraged by the traction that Datadog (DDOG) has seen with its security products, as it has more than 5,000 customers, including 79 who spend more than $100,000. 
"With incremental confidence around the durability of numerous growth vectors, we feel good about the companyâs ability to exceed expectations over the [long-term]," Owens added.
Owens also said that he is seeing signs of stability in the company and the broader industry as well, pointing out two straight quarters of accelerating remaining performance obligations.
Separately on Monday, UBS initiated coverage on Datadog (DDOG) on Monday with a neutral rating, noting it is "insufficiently confident" that the company's "severe" revenue growth slowdown is just due to cyclical headwinds.
Analysts are largely bullish on Datadog (DDOG). It has a BUY rating 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.