Results: Dynatrace, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates
As you might know, Dynatrace, Inc. (NYSE:DT) just kicked off its latest third-quarter results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 2.1% to hit US$365m. Dynatrace also reported a statutory profit of US$0.14, which was an impressive 40% above what the analysts had forecast. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
See our latest analysis for Dynatrace
Taking into account the latest results, the most recent consensus for Dynatrace from 30 analysts is for revenues of US$1.69b in 2025. If met, it would imply a substantial 24% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to fall 13% to US$0.58 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.68b and earnings per share (EPS) of US$0.52 in 2025. Although the revenue estimates have not really changed, we can see there's been a solid gain to earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 6.3% to US$63.71. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Dynatrace analyst has a price target of US$75.00 per share, while the most pessimistic values it at US$50.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. It's pretty clear that there is an expectation that Dynatrace's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 19% growth on an annualised basis. This is compared to a historical growth rate of 24% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% annually. Even after the forecast slowdown in growth, it seems obvious that Dynatrace is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Dynatrace following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Dynatrace analysts - going out to 2026, and you can see them free on our platform here.
Even so, be aware that Dynatrace is showing 2 warning signs in our investment analysis , you should know about...
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
