Datadog falls even as TD Cowen starts with outperform rating
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Datadog (NASDAQ:DDOG) shares fell nearly 2% in pre-market trading on Friday even as investment firm T.D. Cowen started coverage on the cloud software company with an outperform rating.
Analyst Andrew Sherman, who also put a $120 price target on Datadog (DDOG) shares, said the company has become an industry leader, a status it is likely to hold onto given the size and scope of its platform, R&D spending, go-to-market approach and management team. 
"Our checks were highly bullish and, we think DDOG is in the best position to consolidate spend from other tools," Sherman wrote in an investor note, adding that the second-half guidance is likely de-risked and there could be upside from the stabilization in cloud spending and easier comparisons.
Earlier this month, Datadog (DDOG) lowered its fiscal 2023 revenue outlook, as it now expects sales to fall in the range of $2.05B to $2.06B, compared to a prior range of $2.08B to $2.1B.
Sherman also said that Datadog (DDOG) has seen "very strong" net new customer additions and expansions via organic consumption growth and new use cases, as 82% of customers are now using two or more products, while 45% and 21% use four or six or more, respectively.
The company has also benefited from an increase in customers spending $100,000 or more in annual recurring revenue, with this group accounting for 85% of ARR, up from 75% three years ago.

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