IBD Stock Analysis
- Shares currently are forming a three-weeks-tight pattern
- The stock finds support at the 21-day exponential moving average
- The entry point now stands at 51.40, a high reached on June 22
Industry Group Ranking
Three Weeks Tight
* Not real-time data. All data shown was captured at 12:52PM EDT on 06/26/2023.
Maker software Dynatrace (DT) is the IBD Stock of the Day as the company bounces off a key 21-day technical line. Also, Dynatrace stock has formed a three-weeks-tight chart pattern, representing a brief consolidation in which institutional investors pause their buying.
On the stock market today, shares in Dynatrace dipped 1.1% to close at 50.02. DT stock has gained 33% thus far in 2023.
Dynatrace’s computer network monitoring tools measure and analyze the performance of business-critical applications. The apps can be deployed over internal networks or cloud-computing infrastructure.
Dynatrace Stock: 21-Day Line
DT stock initially fell, then clawed back after the company reported fiscal fourth-quarter earnings early May 17. Analysts were concerned about the company’s fiscal 2024 outlook, which included higher investments that would lower profits.
Meanwhile, for fiscal 2024, analysts estimate near flat earnings of $1 a share. But revenue is expected to jump 29% to $1.4 billion.
Waltham, Mass.-based Dynatrace competes in the application performance monitoring market vs. Cisco Systems‘ (CSCO) AppDynamics unit, Datadog (DDOG), New Relic (NEWR) and others.
IBD research has found that with many of the biggest stock market winners, they tend to find support at the 21-day exponential moving average after a breakout. Dynatrace stock holds an entry point of 51.40, its high on June 22.
From a technical view, there’s also a three-weeks-tight pattern. It typically forms in the middle of a stock’s advance and forms after a breakout.
Dynatrace Among AI Stocks To Watch
For some investors, Dynatrace has been among AI stocks to watch. Dynatrace utilizes artificial intelligence tools in its software platform.
However, some AI stocks in the software sector pulled back recently. They include Palantir (PLTR) and C3.ai (AI). Meanwhile, the Nasdaq composite has retreated since June 16.
Amid stiff competition, Dynatrace has an edge over Cisco, Datadog and New Relic, BMO Capital analyst Keith Bachman said in a recent note to clients.
“In the observability segment, we believe that DT has won large displacements from Cisco, NEWR and DDOG,” Bachman said. “Competitors highlight alerts while DT enhances alerts by offering priority and remediation recommendations and/or actions.”
Dynatrace recently upgraded its “Grail”-branded software platform with new automation and artificial intelligence features.
Also, Dynatrace plans to provide application security services as part of the expansion of its Grail platform.
In late 2021, Dynatrace named Rick McConnell as its new chief executive. McConnell had been president and general manager of the security technology group at Akamai Technologies (AKAM).
Thoma Bravo Reducing Stake
Dynatrace went public Aug. 1, 2019, backed by private equity firm Thoma Bravo, raising $570 million. Thoma Bravo is still the biggest shareholder in Dynatrace stock. But Thoma Bravo has been reducing its stake in DT stock in 2023, pressing shares.
In addition, one concern for DT stock if the US economy falls into a recession is that Dynatrace’s price points are higher than those of most rivals, analysts say.
Dynatrace stock has a Relative Strength Rating of 91 out of a best-possible 99, according to IBD Stock Checkup.
Also, Dynatrace stock owns an Accumulation/Distribution Rating of B-minus. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading.
Meanwhile, DT stock holds an IBD Composite Rating of 99 out of a best possible 99. The best growth stocks have a Composite Rating of 90 or better.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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