Morgan Stanley sees nearly 33% upside as cloud growth and enterprise AI spending fuel demand for observability software.
- Morgan Stanley raised its price target to $65 from $58 and upgraded Dynatrace to ‘Overweight’ from ‘Equal Weight.’
- Morgan Stanley expects Dynatrace to deliver durable growth of 20% or more alongside margin expansion over the next two years.
- Wall Street remains bullish, with 26 of 36 analysts covering the stock rating it ‘Buy’ or ‘Strong Buy,’ according to Koyfin.
Dynatrace Inc. (DT) shares gained nearly 5% in early trading on Tuesday after Morgan Stanley upgraded the stock, citing growing demand for observability, a subset of the artificial intelligence market. The brokerage expects the observability market to see its biggest boom in around four years, while Dynatrace could benefit from the trend.
At the time of writing, DT stock had pared some of its gains and was trading 2.2% higher.
Morgan Stanley Upgrades Dynatrace
Morgan Stanley upgraded Dynatrace to ‘Overweight’ from ‘Equal Weight’ and raised its price target to $65 from $58, suggesting nearly 33% upside from Monday’s close.
While Dynatrace’s annual recurring revenue growth has slowed after peaking at 32% in fiscal 2021, Morgan Stanley believes the company is “next in line to see a durable acceleration.”
Observability refers to the process of collecting, analyzing, and relating data to assess how large language models, AI agents, and other layers of the AI technology stack work together, according to a CNBC report.
Morgan Stanley expects Dynatrace to deliver “durable” growth of 20% or more and margin expansion over the next two years, fueled by a surge in demand for observability.
DT Stock: Stocktwits Retail Sentiment
On Stocktwits, retail sentiment for DT remained ‘neutral,’ unchanged in the past 24 hours, while message volume was ‘normal’ at the time of writing.
Morgan Stanley’s call is in line with the broader Wall Street view. According to Koyfin data, 26 of the 36 analysts covering DT rate the stock ‘Buy’ or ‘Strong Buy,’ while 10 rate it ‘Hold.’
The 12-month average price target for DT stock is $58.88, implying nearly 20% upside from the last close.
DT shares have gained nearly 14% year-to-date.
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