On Wednesday, BMO Capital Markets adjusted its outlook on Dynatrace Inc. (NYSE:DT), a software intelligence company, by reducing its price target to $55 from the previous $63. Despite the price target cut, the firm maintained its Outperform rating on the stock.
The revision reflects a cautious stance towards the company's year-over-year Annual Recurring Revenue (ARR) growth for the fiscal year 2025. BMO Capital anticipates a 15.5% growth in ARR, which is slightly below the consensus estimate of around 17%. This projection aligns more closely with what the buy-side expects, as opposed to the broader market consensus.
The analyst from BMO Capital expressed confidence in Dynatrace meeting its fiscal year 2024 ARR growth guidance of 18-19% on a constant currency (CC) basis for the March quarter. This guidance is a key performance indicator for the company's revenue stream stability and future growth potential.
The decision to lower the target price comes in the wake of an observed deceleration in growth. Nonetheless, the firm's Outperform rating remains unchanged. The analyst's optimism is rooted in Dynatrace's leading technology platform and its current valuation in the market.
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