What happened
Datadog (DDOG -1.43%) wasn't exactly a ball-chasing, tail-wagging stock on the market Wednesday. Amid general tech industry gloom, the cloud analytics company was hit with a price target cut from an analyst. At the end of the day, its shares had sunk by over 8%.
So what
Spooked by disappointing earnings reported by tech titans Alphabet and Microsoft, investors shied away from stocks in the sector.
Unfortunately for Datadog investors, this coincided with said analyst price target cut. The chopper was Joel Fishbein of Truist Securities, who included the move in a broader analysis of infrastructure software stocks. In the note, Fishbein reduced his fair value estimation of Datadog stock to $120 per share; previously, he pegged it as being worth $155.
He's maintaining his buy recommendation on the shares, however. Even at the new, reduced level, the company has notable upside -- that $120 is nearly 50% higher than the stock's current price.
While valuations have come down for companies like Datadog, the prognosticator wrote, enterprise software continues to be more critical for businesses in a variety of sectors. He foresees strong demand triggered by this and a raft of recent use cases proving the utility of such solutions.
Now what
Zooming out a bit, we can say that Datadog has also been a victim of the bearish investor sentiment holding down tech stocks over the past few months. We'll get a clearer picture of how the company has been doing of late when it releases its third-quarter earnings next week; these are to be discussed in a conference call on Thursday, Nov. 3 before market open.
