Rosenblatt has reduced its 12-month price target on Dynatrace Inc. (NYSE: DT) to $60.00 from $67.00 but left its Buy rating unchanged as investors await the company’s upcoming quarterly results. The research note accompanies a period in which the shares have weakened materially; the stock is trading at $37.86, close to its 52-week low of $37.43, and is down 29.78% over the prior six months.
Dynatrace is scheduled to report Q3/FY26 results on February 9, 2026, ahead of the market open, with a conference call set for 8:00 AM ET. According to InvestingPro data cited in the coverage, the company is currently viewed as undervalued versus its Fair Value assessment.
Rosenblatt’s expectations for the quarter are for results largely in line with consensus. The firm projects subscription revenue growth of 16%, ARR growth of 17% and Net Revenue Retention (NRR) around 111% for the period. Margin performance remains a highlighted strength in the research note: Dynatrace has maintained gross profit margins near 81.84% in recent quarters.
In its analysis, Rosenblatt emphasizes several operational drivers that underlie Dynatrace’s positioning. The firm points to competitive displacements within large enterprise accounts, continued migration of workloads to public cloud environments, and emerging demand for AI-driven workload monitoring as positive forces supporting the business. Rosenblatt also expects to observe progress from Dynatrace’s FY26 sales coverage realignment, which targets higher-value strategic accounts.
The reduction in the price target stems primarily from what Rosenblatt describes as "recent comparable multiple compression and ongoing macro spending concerns impacting enterprise software." In other words, present market valuation multiples for similar software companies have contracted and Rosenblatt has adjusted its target to reflect that pressure alongside a cautious view on enterprise IT spending trends.
Beyond the near-term financial outlook, Dynatrace used its annual Perform conference in Las Vegas to unveil a slate of product initiatives intended to support longer-term adoption. The company introduced Dynatrace Intelligence, an operations system that blends deterministic and agentic artificial intelligence capabilities. The stated purpose of the new system is to help organizations optimize AI workloads and to strengthen application resiliency.
Additional launches included ready-to-use, domain-specific AI agents aimed at enabling autonomous operations by delivering real-time observability insights across software and business workflows. Dynatrace also announced expanded cloud-native integrations with major providers including Amazon Web Services, Microsoft Azure and Google Cloud, intended to provide a unified view of applications across multi-cloud environments.
The company described enhancements to the developer experience that consolidate various monitoring capabilities into a more cohesive system to manage increasingly complex applications. At the conference, the company displayed customer success stories demonstrating how its AI Observability platform is being applied to scale AI applications, as part of an effort described by Dynatrace to shift enterprises from reactive operations to preventive operations.
Investors will be watching the February results for confirmation of the expected growth and retention metrics, along with any commentary on execution of the sales realignment and the commercial traction of the new AI and cloud-native features. The juxtaposition of product innovation and a reduced valuation framework underpins the current analyst stance.
Summary
- Rosenblatt cut Dynatrace’s price target to $60 from $67 but kept a Buy rating.
- The stock is trading near its 52-week low at $37.86 and has fallen 29.78% over six months.
- Dynatrace will report Q3/FY26 results on February 9, 2026, before the market opens; a conference call is scheduled for 8:00 AM ET.
Key Points
- Rosenblatt projects in-line Q3 results with 16% subscription revenue growth, 17% ARR growth and roughly 111% NRR; gross margins recently near 81.84%.
- Product announcements at the Perform conference - including Dynatrace Intelligence and domain-specific AI agents - aim to accelerate AI workload monitoring and multi-cloud observability adoption.
- Sectors impacted include enterprise software, cloud infrastructure and AI operations - each tied to enterprise IT spending and digital transformation projects.
Risks and Uncertainties
- Valuation Risk: Rosenblatt lowered its target largely due to recent multiple compression among comparable software companies, signaling valuation pressure in the enterprise software sector.
- Macro Spending Risk: Ongoing macroeconomic concerns are cited as weighing on enterprise IT budgets, which could affect software spending and renewal dynamics.
- Execution Risk: The market will monitor whether Dynatrace’s FY26 sales coverage realignment and new AI-driven product offerings translate into measurable commercial gains.