Morgan Stanley upgraded software observability firm Dynatrace Inc. to Overweight from Equalweight, citing robust demand prospects and elevated renewal activity. The bank raised its price target to $65 from $58.
Scotiabank and Canaccord Genuity separately increased their price targets to $61 and $60, respectively, while DA Davidson and UBS maintained Buy ratings. Morgan Stanley projects Dynatrace’s net new annual recurring revenue (ARR) growth to exceed 20% in fiscal 2027, with ARR growth maintaining that pace in fiscal 2028 and 2029.
Dynatrace reported adjusted earnings of $0.48 per share on revenue of $554.54 million for the first fiscal quarter, surpassing analyst expectations of $0.44 per share and $549.29 million. The company also revised parts of its full-year guidance upward.
InvestingPro data shows Dynatrace’s revenue rose 18% over the trailing twelve months, supported by a gross profit margin of 82%. UBS noted a 41% year-over-year increase in net new organic ARR, while Canaccord Genuity highlighted a $275 million share buyback executed in the most recent quarter.
Renewal activity remains a key driver. Dynatrace’s upcoming platform subscription renewals are 50% larger than those in fiscal 2026, with 70% concentrated in the second half of fiscal 2027. The underlying usage growth for this renewal cohort exceeds 20%.
The company also announced plans to acquire agentic observability provider Arize for $915 million, further expanding its product suite.
