Datadog Acquisition of Upwind Security to Bolster Security Offering, Says BofA

Datadog is in talks to acquire Upwind Security for up to $1B, according to a media report. If the acquisition happens, it would boost Datadog's security offering and help it gain more mindshare of the security budget decision maker. BofA analyst Koji Ikeda maintains a Buy rating and $175 price target on Datadog shares.

Datadog (DDOG), a leading cloud monitoring and security company, is reportedly in talks to acquire Upwind Security, a relatively new player in the cybersecurity market, for approximately $1 billion [1]. This potential acquisition comes as Datadog continues to expand its security offerings and gain more influence with security budget decision-makers.

Upwind Security, founded at the end of 2022, has already raised $180 million in investments and is operating in the competitive Cloud-Native Application Protection Platform (CNAPP) market. Datadog's interest in Upwind Security is seen as a strategic move to bolster its cloud security offerings, which currently generate around $50 million in annual recurring revenue (ARR) and are growing at more than 30% year-over-year [3].

BofA Securities analyst Koji Ikeda maintains a Buy rating on Datadog shares with a $175 price target, citing the potential acquisition as a positive development for the company. The analyst notes that the acquisition would add scale to Datadog's security segment and help the company gain more mindshare with security budget decision-makers [3].

If the acquisition goes through, it would be a significant deal for Upwind Security's founders, who have previously sold Spot.io to NetApp for $450 million. The founders are known for their quick exits from startups, and this acquisition would likely follow a similar pattern [2].

The acquisition would also align with Datadog's ongoing efforts to expand its cloud security offerings. As SIEM and CNAPP solutions converge, Datadog's acquisition of Upwind Security would allow it to strengthen its position in the market [2].

References:
[1] https://www.gurufocus.com/news/2994743/datadog-ddog-eyes-acquisition-of-upwind-for-1b-ddog-stock-news?mobile=true
[2] https://www.techzine.eu/news/security/133247/datadog-wants-to-acquire-upwind-security-for-1-billion/
[3] https://www.investing.com/news/analyst-ratings/datadog-stock-price-target-maintained-at-175-by-bofa-on-potential-acquisition-93CH-4146447