DT Should I Buy
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Dynatrace Inc is not a strong buy at the moment for a beginner investor with a long-term strategy. While the company has shown strong revenue growth and raised guidance, the significant drop in net income and EPS, coupled with bearish technical indicators and hedge fund selling, suggests waiting for a clearer entry point. The options data and analyst ratings are mixed, and there are no strong proprietary trading signals to support an immediate buy decision.
The MACD is positive and expanding, indicating mild bullish momentum. However, the RSI is neutral at 48.319, and the moving averages are bearish (SMA_200 > SMA_20 > SMA_5). The stock is trading below key resistance levels, with a pivot at 35.882, R1 at 38.201, and S1 at 33.564. Overall, the technical indicators suggest a bearish trend.
Dynatrace reported an 18% YoY revenue increase in Q3 2026, exceeding analyst expectations.
The company raised its FY26 adjusted EPS guidance to $1.67-$1.
A new $1 billion share repurchase program was announced, signaling confidence in the company's future.
Strong Q4 guidance and increasing annual recurring revenue (ARR) to nearly $2 billion.
Net income dropped by 88.93% YoY, and EPS fell by 89.08% YoY, indicating profitability challenges.
Hedge funds are selling, with a 338.51% increase in selling activity over the last quarter.
Analysts have lowered price targets across the board, reflecting concerns over software market valuation compression.
Bearish technical indicators and a lack of proprietary trading signals.
In Q3 2026, Dynatrace reported revenue growth of 18.18% YoY to $515.5 million. However, net income dropped significantly by 88.93% YoY to $40.1 million, and EPS fell by 89.08% YoY to $0.13. Gross margin improved slightly to 81.41%, up 1.56% YoY. While revenue growth is strong, the steep decline in profitability is a concern.
Analysts maintain mostly positive ratings with several 'Outperform' and 'Buy' recommendations. However, price targets have been lowered across the board due to valuation compression in the software sector. Analysts highlight Dynatrace's strong Q3 performance, increasing ARR, and potential AI-driven growth opportunities, but concerns over competition and market turbulence persist.
