Citi says Palo Alto's Chronosphere deal to pile more pricing pressure on Datadog

Citi expects Palo Alto Networks' PANW.O $3 bln acquisition of Chronosphere to intensify pricing pressure on cloud security firm Datadog DDOG.O

Brokerage cuts PT on DDOG from $230 to $200, still indicating an upside of about 27% to the stock's last close

Chronosphere's lower-cost model could gain an advantage when combined with PANW's extensive distribution network, brokerage says

Citi warns this could slow the recovery of DDOG's non-AI customer base and risk the loss of a major client—likely OpenAI—which might switch away entirely

Avg rating of 42 analysts is "buy," their median PT is $217 - data compiled by LSEG

Up to last close, stock up 10.3% this year