S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
South Korean doctors hold massive anti-government rally over medical school recruitment plan
Critical asset just had biggest fall on record (Ad)
Nobel laureate Muhammad Yunus is granted bail in a Bangladesh graft case
Trader Joe's chicken soup dumplings recalled for possibly containing permanent marker plastic
Critical asset just had biggest fall on record (Ad)
The former chairman of the state-owned Bank of Beijing is being investigated for alleged corruption
Chicago 'mansion' tax to fund homeless services stuck in legal limbo while on the ballot
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
What to watch for as China's major political meeting of the year gets underway
Head Start preschools aim to fight poverty, but their teachers struggle to make ends meet
S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
South Korean doctors hold massive anti-government rally over medical school recruitment plan
Critical asset just had biggest fall on record (Ad)
Nobel laureate Muhammad Yunus is granted bail in a Bangladesh graft case
Trader Joe's chicken soup dumplings recalled for possibly containing permanent marker plastic
Critical asset just had biggest fall on record (Ad)
The former chairman of the state-owned Bank of Beijing is being investigated for alleged corruption
Chicago 'mansion' tax to fund homeless services stuck in legal limbo while on the ballot
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
What to watch for as China's major political meeting of the year gets underway
Head Start preschools aim to fight poverty, but their teachers struggle to make ends meet
S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
South Korean doctors hold massive anti-government rally over medical school recruitment plan
Critical asset just had biggest fall on record (Ad)
Nobel laureate Muhammad Yunus is granted bail in a Bangladesh graft case
Trader Joe's chicken soup dumplings recalled for possibly containing permanent marker plastic
Critical asset just had biggest fall on record (Ad)
The former chairman of the state-owned Bank of Beijing is being investigated for alleged corruption
Chicago 'mansion' tax to fund homeless services stuck in legal limbo while on the ballot
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
What to watch for as China's major political meeting of the year gets underway
Head Start preschools aim to fight poverty, but their teachers struggle to make ends meet
S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
South Korean doctors hold massive anti-government rally over medical school recruitment plan
Critical asset just had biggest fall on record (Ad)
Nobel laureate Muhammad Yunus is granted bail in a Bangladesh graft case
Trader Joe's chicken soup dumplings recalled for possibly containing permanent marker plastic
Critical asset just had biggest fall on record (Ad)
The former chairman of the state-owned Bank of Beijing is being investigated for alleged corruption
Chicago 'mansion' tax to fund homeless services stuck in legal limbo while on the ballot
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
What to watch for as China's major political meeting of the year gets underway
Head Start preschools aim to fight poverty, but their teachers struggle to make ends meet

Dynatrace Stock Surges On AI, 'Mandatory' Network Monitoring

Dynatrace stock price

Key Points

  • Market optimism over Dynatrace's network observability and monitoring services, driven by AI technologies, spurred strong recent price action. 
  • Following its Q4 earnings report, Dynatrace broke out of a cup-shaped consolidation on May 18.
  • The company reported EPS of $0.31 on May 17, an 82% increase from the year-earlier quarter, with revenue growing by 25% to $314.5 million.
  • Dynatrace consistently beat top and bottom-line views in the past three quarters.
  • 5 stocks we like better than Dynatrace

Dynatrace Inc. NYSE: DT has been a strong performer recently, benefiting from the market's optimism about the company’s AI technologies, as well as its network monitoring services.

A glimpse of the Dynatrace chart chart shows a stock clawing its way out of a steep decline that began in October 2021. Recent price action has been strong, with the following gains:

  • 1 month: 27.35%
  • 3 months: 24.81%
  • Year-to-date: 37.39%

Following the company's fiscal fourth-quarter earnings report, the stock broke out of a cup-shaped consolidation on May 18. 

On May 17, Dynatrace reported net income of $0.31 a share,  up 82% from the year-earlier quarter. Revenue grew by 25% to $314.5 million. 

Beating Analysts' Views

Dynatrace earnings data show the company beat top and bottom-line views in each of the past three quarters. 

It also trounced its own estimates in the most recent quarter. 

The company increased its revenue guidance for the current quarter and the full year.

Massachusetts-based Dynatrace makes “observability” software, which allows businesses to monitor the performance of applications, networks, and infrastructure in real time. 

Resolving Customers' Problems Quickly

With this advanced data analysis, Dynatrace can identify any issues or bottlenecks that may affect the performance of its clients’ digital services. This helps businesses detect and resolve problems quickly, ensuring smooth operations and positive user experiences. Dynatrace also offers insights and recommendations to improve system performance. 

Dynatrace went public in 2019, and has been profitable since even before making its NYSE debut. That’s somewhat unusual in the tech space, where venture-funded companies can take years to generate revenue before eventually turning a profit. 

The company has posted double-digit revenue and profit growth since the quarter ended in September 2021. That’s also somewhat unusual, as many techs saw revenue decline last year. As inflation ratcheted up, there was widespread speculation that enterprise clients would tighten their belts, and spend less on cloud-computing security and analytics services.


From Optional To Mandatory

However, that hasn’t occurred, at least not to the extent that some pundits predicted. In the most recent quarterly report, Dynatrace CEO Rick McConnell said, in a statement, “Observability is quickly moving from optional to mandatory as customers look to tame the explosion of data and increased complexity that's driven by their cloud migration and digital transformation initiatives.” 

In its own filings, Dynatrace says direct and indirect competitors include Cisco Systems Inc. NASDAQ: CSCO, Datadog Inc. NASDAQ: DDOG, Splunk Inc. NASDAQ: SPLK, Palo Alto Networks Inc. NASDAQ: PANW, Akamai Techologies Inc. NASDAQ: AKAM, and several privately held companies. 

The company’s proprietary AI engine, dubbed Davis, is continually learning to provide precise answers when a customer’s system performance deviates from expected or desired conditions. 

According to Dynatrace, Davis differs from machine learning-based engines that rely on historical data, in that these rival products “can overwhelm IT professionals with alerts.”  

From Reactive To Proactive

The company’s filings read, “We believe the accuracy and precision of the answers delivered by Davis enable our customers to shift from reactive to proactive remediation, providing a substantial advantage in time savings, resource efficiency, customer satisfaction, and business outcomes.”

Dynatrace analyst ratings show a consensus of “moderate buy,” but investors should use some caution. The stock is currently extended 10% beyond its buy point above $48. It closed 18.6% above its 50-day moving average on June 5 after fast rallies recently. 

Boosting Price Targets

After its earnings report, nine analysts either boosted their price target or upgraded their rating on the stock. Investment bank William Blair initiated coverage with a rating of “outperform.”

Institutional owners are clearly buying the story, as is evident by the recent big price moves. MarketBeat’s institutional ownership data for Dynatrace shows that 306 institutional buyers accounted for $2.03 billion in inflows in the past 12 months versus 194 institutional sellers who unloaded $1.02 billion worth of shares. 

As a fairly new public company and one that is still in fast growth mode, Dynatrace does not, as of yet, pay a dividend and has said it has no intention of doing so in the foreseeable future. The attraction to this stock is growth potential, not income. 

→ This is the #1 Stock to Buy for the AI Tidal Wave (From Chaikin Analytics) (Ad)

Should you invest $1,000 in Dynatrace right now?

Before you consider Dynatrace, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Dynatrace wasn't on the list.

While Dynatrace currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

A Guide To High-Short-Interest Stocks Cover

MarketBeat's analysts have just released their top five short plays for March 2024. Learn which stocks have the most short interest and how to trade them. Click the link below to see which companies made the list.

Get This Free Report

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Dynatrace (DT)
4.9657 of 5 stars
$49.05-1.0%N/A74.32Moderate Buy$60.63
Cisco Systems (CSCO)
4.9042 of 5 stars
$48.40+0.1%3.22%14.71Hold$56.36
Splunk (SPLK)
4.2403 of 5 stars
$156.160.0%N/A123.94Hold$135.31
Datadog (DDOG)
3.8936 of 5 stars
$130.22-0.9%N/A1,085.17Moderate Buy$128.18
Akamai Technologies (AKAM)
4.1959 of 5 stars
$110.24-0.6%N/A31.23Moderate Buy$119.06
Palo Alto Networks (PANW)
4.6767 of 5 stars
$302.40-2.6%N/A47.25Moderate Buy$313.89
Compare These Stocks  Add These Stocks to My Watchlist 

Kate Stalter

About Kate Stalter

  • stalterkate@gmail.com

Contributing Author

Retirement, Asset Allocation, and Tax Strategies

Experience

Kate Stalter has been a contributing writer for MarketBeat since 2021.

Additional Experience

Series 65-licensed investment advisor, financial advisor, Blue Marlin Advisors; investment columnist for Forbes, U.S. News & World Report

Areas of Expertise

Asset allocation, technical and fundamental analysis, retirement strategies, income generation, risk management, sector and industry analysis

Education

Bachelor of Arts, Saint Mary’s College, Notre Dame, Indiana; Master of Business Adminstration, Kellogg School of Management at Northwestern University

Past Experience

Founder, financial advisor for Better Money Decisions; editor, stock trading instructor for Investor’s Business Daily; columnist, podcast host, video host for MoneyShow.com; contributor for Morningstar magazine


Featured Articles and Offers

Search Headlines: