The sell-off in Datadog ‘s stock creates an attractive buying opportunity for investors looking to take advantage of the crippled software sector, Canaccord Genuity said. “With shares down nearly 30% since early July (vs. QQQ down ~7%), we now view DDOG as one of the best stocks to play a beaten-down software tape,” wrote analyst Kingsley Crane as he upgraded shares to buy from hold. Shares of the cloud software company have plummeted nearly 56% this year, with the new price target suggesting shares can jump 39% from Wednesday’s close. Among his reasons for liking the stock, Crane cited opportunities from the company’s newer and secondary products like its cloud cost management and cloud security offerings. “DDOG can easily demonstrate customer ROI from gaining detailed visibility into cloud usage trends and managing them as needed,” he wrote. “If done right, it further cements DDOG’s strategic foothold in a customer while also offering attractive upsell potential.” The need for Datadog’s tools as businesses expand should also insulate the stock from fears of deceleration in the software market as consumers look to cut costs, Crane said. “DDOG’s deep product moat, continued underlying platform innovation, powerful customer consumption momentum, and Rule of 50% financial profile justify a premium valuation and our buy rating,” he wrote. Shares added more than 3% in the premarket trading. — CNBC’s Michael Bloom contributed reporting
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