Datadog (DDOG) is in advanced acquisition talks with Israeli cybersecurity firm Upwind Security, potentially enhancing its cloud security offerings. Meanwhile, a new integration with Reflectiz expands its enterprise security capabilities. Inclusion in major indices like the S&P 500 Equal Weighted and S&P Global 1200 marks a boost in Datadog's market visibility. These developments, focusing on strategic growth and expansion, provide important context to its share price growth of 28% in the last quarter, outpacing the broader market's mixed performance amidst fluctuations due to economic factors and earnings forecasts.

Be aware that Datadog is showing 1 possible red flag in our investment analysis.

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The potential acquisition of Upwind Security and integration with Reflectiz could enhance Datadog's cloud security and enterprise capabilities, potentially boosting its long-term revenue and earnings forecasts. These advancements align well with Datadog’s recent strategic moves in AI and security, which are central to its growth narrative. As Datadog continues to innovate and improve its product suite, these developments might support a stronger market position, which in turn could influence positive revenue trends moving forward.

Over the past five years, Datadog’s total shareholder return, including share price appreciation and dividends, was 77.57%. This performance reflects significant ongoing growth and contrasts with its recent 1-year period, where the company's return underperformed the US Software industry, which saw a 38.5% growth. Considering the recent price growth of 28% over the last quarter, the company looks appropriately active in the current market cycle, despite some challenges posed by the broader economic environment.

The current share price of US$135.60 is trading at a discount to the consensus analyst price target of US$149.99, suggesting room for potential growth if revenue and earnings forecasts align with expectations. Analysts project that earnings per share will grow significantly over the next three years, potentially validating these price targets. However, with a consensus valuation suggesting the company is fairly priced, investors should consider these price movements in the context of Datadog's broader strategic initiatives and market conditions.

Review our historical performance report to gain insights into Datadog's track record.

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.

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