On Thursday, Citi maintained a Buy rating on GoDaddy Inc (NYSE:GDDY) stock and increased the price target to $195 from the previous target of $176. The adjustment follows the company's robust third-quarter financial performance, which surpassed expectations in several key areas.
GoDaddy's third-quarter results showcased revenue that slightly exceeded forecasts and notably higher NEBITDA. A significant highlight was the 20% growth in A&C bookings. Although fourth-quarter guidance aligned with projections, the consistent bookings growth and the company's solid product development have bolstered confidence in GoDaddy's ability to meet its financial targets.
The company's execution on product innovation, pricing, bundling, and cost management is expected to contribute to revenue and free cash flow (FCF) growth in the upcoming years. Despite increasing competition in bookings, GoDaddy's management emphasized the nascent stage of their pricing and bundling initiatives, which are now expanding to include new products and the core business segment.
The early contributions from Airo and other new products were also noted as positive factors. Citi's analyst highlighted GoDaddy's strong execution, favorable market conditions, and a current valuation that does not fully reflect the company's performance and potential. The positive outlook is based on GoDaddy's continuous momentum and strategic initiatives that are anticipated to drive future growth.
In other recent news, GoDaddy Inc. has been the subject of several analyst firms' attention due to its robust financial performance. The company reported a 7% increase in total revenue for Q2, reaching $1.1 billion, with a significant 15% growth in the Applications and Commerce segment. Following these results, GoDaddy raised its full-year revenue guidance.
Barclays reiterated an Overweight rating on GoDaddy with a price target of $185, despite noting potential challenges in the U.S. market and concerns about aftermarket pricing. Benchmark maintained a Buy rating and raised its price target from $170 to $186, influenced by GoDaddy's Free Cash Flow per Share Compound Annual Growth Rate target for 2024 to 2026. RBC Capital Markets also increased its price target from $145 to $175, maintaining an Outperform rating, following GoDaddy's strong Q2 performance.
Cantor Fitzgerald initiated coverage with a Neutral rating and a price target of $170, citing expected benefits from the company's strategies and AI-driven monetization efforts. Meanwhile, Baird maintained an Outperform rating and a $190 price target for GoDaddy's stock. Despite carrying a net debt of $3.4 billion, GoDaddy remains committed to its AI initiatives, including GoDaddy Airo and GABI, a customer service tool. These recent developments provide valuable insights into GoDaddy's financial health and strategic direction.
InvestingPro Insights
GoDaddy's recent performance aligns with several key metrics and insights from InvestingPro. The company's market capitalization stands at $22.78 billion, reflecting its significant presence in the domain registration and web hosting industry. GoDaddy's revenue for the last twelve months as of Q2 2024 reached $4.403 billion, with a notable revenue growth of 5.91% over the same period.
InvestingPro Tips highlight that GoDaddy has been aggressively buying back shares, which often signals management's confidence in the company's future prospects. This aligns with Citi's positive outlook on the company's execution and growth potential. Additionally, GoDaddy's stock has shown a high return over the last year, with a remarkable 120.67% price total return, underscoring the market's recognition of the company's strong performance.
The company's profitability is evident from its adjusted operating income of $795 million and an operating income margin of 18.06% for the last twelve months as of Q2 2024. This robust financial health supports Citi's expectation of continued revenue and free cash flow growth in the coming years.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips that could provide deeper insights into GoDaddy's financial position and market performance.
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