On Wednesday, Raymond James resumed coverage on GoDaddy Inc (NYSE:GDDY), a well-known internet domain registrar and web hosting company, with a Strong Buy rating. The financial services firm set a price target for the company's shares at $150.00.
The coverage reinstatement comes with a positive outlook based on GoDaddy's use of its Airo GenAI stack, which is anticipated to reduce barriers for small and medium-sized businesses (SMBs) adopting a broader range of products beyond core domain services.
These extended offerings include logo creation, online presence tools, and commerce/payment solutions. Raymond James expects these enhancements to increase the proportion of customers using two or more GoDaddy products, which currently stands at over 50%.
The analyst from Raymond James highlighted the potential for GoDaddy to leverage its extensive customer care experience and a deep dataset, which encompasses over 20 million customers and 14 million interactions.
This includes a unique Conversations corpus spanning SMB email, messages, and social media accounts. The expectation is that GoDaddy could transition to a more autonomous service model, using this wealth of data to respond to customer inquiries and possibly develop a significant software-as-a-service (SaaS) component for SMB agents.
The price target of $150.00 is based on a 16.5 times multiple of the projected 2025 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), which is generally lower than the multiples of peers in the SMB and commerce software sector. The analyst also noted a substantial potential upside, with a 124% spread between their bull and bear case scenarios.
By integrating the Airo GenAI stack, GoDaddy aims to create a more streamlined experience for its customers, potentially transforming the company into a more competitive player in the SMB services market. The Strong Buy rating reflects Raymond James' confidence in GoDaddy's strategic direction and its potential for growth in the coming years.
InvestingPro Insights
As GoDaddy (NYSE:GDDY) receives a Strong Buy rating from Raymond James, real-time data from InvestingPro provides further context to this optimistic outlook. The company's management has been actively buying back shares, signaling confidence in the business's value and future prospects, which aligns with the positive analysis from Raymond James. Additionally, GoDaddy has demonstrated a high shareholder yield, further underscoring the potential benefits for investors.
From a financial standpoint, GoDaddy's market capitalization stands at a robust $17.23 billion, and the company maintains a P/E ratio of 13.11, which adjusts to 11.76 for the last twelve months as of Q4 2023. This valuation metric suggests a relatively attractive price for earnings, especially when considering the company's revenue growth of 3.98% over the same period. Moreover, GoDaddy's stock has experienced a significant price uptick over the last six months, with a 65.94% return, indicating a strong market performance that investors may find encouraging.
For those seeking more in-depth analysis and additional InvestingPro Tips, such as insights on the company's low price volatility and future net income expectations, GoDaddy's profile on InvestingPro offers a total of 15 tips. To access these valuable insights and optimize your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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