Dynatrace upgraded to Buy from Neutral at Guggenheim, citing increased usage of application performance monitoring and consolidation of observability tools.

Guggenheim analyst Howard Ma upgraded Dynatrace (DT) to Buy from Neutral with a $66 price target, citing increased usage of application performance monitoring and consolidation of observability tools onto the company's platform. Ma believes subscription revenue growth of at least 17% in fiscal 2026 is possible for Dynatrace.

Guggenheim analyst Howard Ma has upgraded Dynatrace (DT) to a Buy rating from Neutral, setting a $66 price target. The upgrade reflects increased confidence in the catalysts driving Dynatrace's business forward, particularly in application performance monitoring (APM) and observability tool consolidation [1].

Ma anticipates robust subscription revenue growth for Dynatrace, with projections indicating at least a 17% increase by fiscal year 2026. This growth is expected to be driven by stronger-than-expected demand for APM, increased adoption of log management, and rising customer overages within the company's consumption-based model [1].

Recent channel checks showed that multiple partners exceeded targets in the June quarter, helped by tool consolidation and expansion activity, particularly among large enterprise clients. Early renewals, some triggered by overages of $50,000 or more, have also contributed to deal size uplifts [1].

Dynatrace's growing log management business, expected to more than double this year to over $100 million in consumption revenue, is seen as a major revenue driver. Partners characterized the company's logs offering as highly competitive in performance and pricing flexibility [1].

The firm also pointed to improving sales productivity following go-to-market changes in fiscal 2025, with about 30% of reps under one year of tenure now maturing. Management has introduced dedicated teams for key products and aligned compensation incentives with annual recurring revenue growth [1].

Despite conservative guidance assumptions, including flat year-over-year net new ARR, Guggenheim believes Dynatrace is set up for potential outperformance. The company's high exposure to secular themes like application modernization, observability consolidation, and AI integration is also seen as a long-term advantage [1].

Based on the one-year price targets offered by 30 analysts, the average target price for Dynatrace Inc (DT) is $62.71, with a high estimate of $70.00 and a low estimate of $52.00. The average target implies an upside of 19.27% from the current price of $52.58 [2].

The consensus recommendation from 35 brokerage firms is currently 2.0, indicating an "Outperform" status. GuruFocus estimates the GF Value for Dynatrace Inc (DT) in one year to be $72.96, suggesting a potential upside of 38.76% from the current price of $52.58 [2].

References:
[1] https://www.investing.com/news/stock-market-news/guggenheim-upgrades-dynatrace-as-it-sees-catalysts-building-for-fy26-growth-beat-4148739
[2] https://www.gurufocus.com/news/2996220/dynatrace-dt-receives-upgrade-with-promising-growth-outlook-dt-stock-news