Investing.com -- Wolfe Research downgraded Datadog (NASDAQ:DDOG) to "Peer Perform" from "Outperform" on weaker-than-expected fiscal 2025 growth guidance, competitive pressures, and margin concerns. Meanwhile, the firm upgraded Snowflake (NYSE:SNOW) to "Outperform" with a $235 price target, highlighting improving consumption trends and strong product momentum.
Datadog's growth durability is challenged as large customers continue to optimize spending while competitive intensity rises from both public and private players.
"We see a more turbulent period around fundamentals and market dynamics which we believe will limit growth and upside," the firm said.
Snowflake sees stabilizing consumption trends, a favourable competitive landscape, and strong product momentum. Brokerage expects fourth-quarter revenue growth of about 28% and fiscal 2026 guidance of 23% year-over-year growth.
“We see better core consumption trends, a more favorable hyperscaler competitive backdrop, and more and better product momentum once again driving some of the highest top line growth in our coverage," the firm noted.
Wolfe sees potential for further multiple expansion if Snowflake sustains mid-to-high 20% growth, with free cash flow margins approaching 30%.
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