Canaccord Genuity reveals its top pick in the software space

A 30% sell-off in Datadog Inc (NASDAQ: DDOG) over the past two months has created an opportunity for the long-term investors to own a quality name at a significant discount, says Kingsley Crane – Senior Analyst at Canaccord Genuity.

Datadog stock could be worth $110

In fact, Crane dubbed the network security company his top pick in the software space. His “buy” rating on the Datadog stock came with a price target of $110 that represents about a 35% upside from here.

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Also this week, IBM reported a positive quarter, which, the analyst said on CNBC’s “TechCheck”, suggests strength in cloud infrastructure.

We typically view these businesses as very durable. Regardless of the demand for end product, we’ve seen infrastructure continued to grow, underlying data continued to be important, and encouraged ongoing consumption.

For the year, the Datadog stock is down roughly 50%.

Datadog will soon report its quarterly results

Crane recommends buying the Datadog stock for its cloud-cost management offerings. He turned bullish on the Nasdaq-listed firm after its two-day user conference that pleased several other analysts as well.

Datadog Inc is scheduled to report its quarterly results on November 3^rd that, Crane is convinced, will positively surprise. Consensus is for the cloud company to lose 8 cents a share versus 1 cent a year ago. His note reads:

Datadog’s platform flywheel is at full power. Customer and partner feedback indicated competitive strength is only improving.

Earlier in October, Datadog Inc launched a unified end-to-end platform to test web applications.

Crane likes the enterprise software company even though the Fed looks adamant on raising rates further (read more) that suggests not a very attractive environment for high valuation tech stocks moving forward.