Another Dynamic Quarter With Strong Top-Line Growth for Dynatrace; Maintain Fair Value Estimate

We are maintaining our $40 fair value estimate for narrow-moat Dynatrace after the firm reported strong fiscal 2023 third-quarter financial results. We continue to have a positive outlook on Dynatrace’s ability to penetrate its target market by landing new logos and expanding sales within its existing client base. In our opinion, the firm’s strong execution of its land-and-expand strategy, as evidenced by its solid net retention metric, augments its competitive advantage by increasing switching costs. We believe that this strategy, buoyed by secular tailwinds, will allow Dynatrace to deliver shareholder value in the long run. With the shares up 13% so far on Feb. 1, we believe the market has calibrated its valuation to reflect the firm’s strong fundamentals. We view the stock as fairly valued.