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Here's What Analysts Are Forecasting For Datadog, Inc. (NASDAQ:DDOG) After Its Third-Quarter Results

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Simply Wall St
·4 min read
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It's been a mediocre week for Datadog, Inc. (NASDAQ:DDOG) shareholders, with the stock dropping 10% to US$90.01 in the week since its latest third-quarter results. Sales of US$155m came in 7.2% ahead of expectations, although statutory earnings didn't fare nearly so well, recording a loss of US$0.05, a 14% miss. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Datadog

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the current consensus from Datadog's 18 analysts is for revenues of US$798.4m in 2021, which would reflect a sizeable 48% increase on its sales over the past 12 months. Losses are forecast to balloon 655% to US$0.19 per share. Before this earnings announcement, the analysts had been modelling revenues of US$773.4m and losses of US$0.18 per share in 2021. So it's pretty clear consensus is mixed on Datadog after the new consensus numbers; while the analysts lifted revenue numbers, they also administered a per-share loss expectations.

There was no major change to the consensus price target of US$101, with growing revenues seemingly enough to offset the concern of growing losses. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Datadog, with the most bullish analyst valuing it at US$140 and the most bearish at US$80.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of Datadog'shistorical trends, as next year's 48% revenue growth is roughly in line with 51% annual revenue growth over the past three years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 13% next year. So it's pretty clear that Datadog is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Datadog analysts - going out to 2024, and you can see them free on our platform here.

Before you take the next step you should know about the 5 warning signs for Datadog (1 is a bit unpleasant!) that we have uncovered.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.