Dynatrace Inc. (DT) PT Lowered to $47 at Scotiabank

Scotiabank analyst Patrick Colville lowered the price target on Dynatrace Inc. (NYSE: DT) to $47.00 (from $60.00) while maintaining a Sector Outperform rating.

The analyst commented: "We reaffirm our Sector Outperform rating after Dynatrace put up a solid F3Q. New ARR grew double digits this quarter and is set to do so again in F4Q. We see this as evidence of Dynatrace’s end-to-end, hybrid observability offering resonating with large enterprise accounts, with no impact from changes in competitive positioning. We believe that observability buyers will be hesitant to purchase Chronosphere from Palo Alto Networks, a security vendor, and Snowflake’s acquisition of Observe.AI as a log management play is positioning against Splunk and Elastic. Management stepping back from talking about the distracting “on demand” consumption metric is a positive. The lack of explosive sparkle from any AI-native customers stops Dynatrace moderates our view. Nonetheless, we feel good about the ability of Dynatrace to surpass expectations and view DT’s valuation of ~12x C27E EBITDA as undemanding for a company operating in a defensible area of software. We believe Dynatrace should be insulated from the risk of “vibe coded copycats, given the critical nature of observability, and we see no evidence that the LLMs themselves can provide similar functionality."

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