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Datadog (DDOG) Surges 3.7%: Is This an Indication of Further Gains?

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Datadog (DDOG - Free Report) shares ended the last trading session 3.7% higher at $170.16. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 13.9% loss over the past four weeks.

The upswing can be attributed to increased adoption of its cloud-based monitoring and analytics platform owing to the accelerated digital transformation and cloud migration across organizations. Strength in cloud is expected to continue, driven by an expanding partner base and a robust portfolio.

This data analytics and cloud monitoring company is expected to post quarterly earnings of $0.11 per share in its upcoming report, which represents a year-over-year change of +83.3%. Revenues are expected to be $291.17 million, up 64% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Datadog, the consensus EPS estimate for the quarter has been revised 0.6% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on DDOG going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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