GoDaddy (GDDY) upgraded to Overweight as Piper Sandler sees growth potential
In a recent research note to clients covering commerce tech, analysts at Piper Sandler upgraded shares of GoDaddy (NYSE: GDDY) from Neutral to Overweight. Along with this upgrade, they raised their price target for the stock to $121 from $100 per share. This positive rating comes as the analysts identify an opportunity for positive growth revisions in the company.
Analysts raise GoDaddy’s price target to $121 on positive growth outlook
The price target increase for GoDaddy is primarily based on a lower discount rate and a higher terminal Free Cash Flow (FCF) multiple. Piper Sandler analysts are optimistic about the growth potential of the company and believe that higher-quality names within GoDaddy’s portfolio can experience positive growth revisions in the coming years. Although 2023 may present some challenges for the Commerce Tech industry, the analysts are looking forward to 2024 as a year of significant growth for GoDaddy.
2024 poised for positive growth revisions in GoDaddy’s higher-quality names
While 2023 might be a challenging year for Commerce Tech overall, Piper Sandler analysts are optimistic about the potential for positive growth revisions in GoDaddy’s higher-quality names in 2024. These revisions in growth are expected without sacrificing progress on profitability, indicating that the company’s performance could improve in terms of both revenue and profitability.
GDDY on track for strong margins and accelerated growth in FY24
According to the research note, GoDaddy is expected to achieve a 29% NEBITDA (Net Earnings Before Interest, Taxes, Depreciation, and Amortization) margin exit rate in 2023E (estimate). Additionally, the analysts anticipate 8% growth in Domains bookings in the last quarter, indicating positive momentum for the company. With such promising figures, the analysts believe that GoDaddy is well-positioned to achieve high single-digit (HSD) growth in FY24 along with a 30%+ NEBITDA margin. This projection marks a potential reacceleration of growth for the company.
Potential for reversal in GDDY’s multiple compression trend, say analysts
Another noteworthy observation from the research note is that the analysts believe GoDaddy has the potential to reverse its five-year trend of multiple compression. This indicates that the stock has the opportunity to regain investor confidence and experience an increase in its valuation over the coming years. The positive growth projections and improved profitability anticipated by Piper Sandler further support this potential reversal.
In summary, GoDaddy’s recent upgrade to Overweight by Piper Sandler reflects the analysts’ positive outlook on the company’s growth potential. With a higher price target and expectations for positive growth revisions in its higher-quality names, GoDaddy appears to be on track for stronger margins, accelerated growth, and a potential reversal of its multiple compression trend. Investors and market participants will likely be closely watching GoDaddy as it continues its journey towards increased profitability and shareholder value.
Analyst comment
Positive news. Analysts expect GoDaddy to experience positive growth revisions, strong margins, and accelerated growth in FY24. They believe the company’s higher-quality names can drive growth in the coming years. There is also potential for a reversal in the stock’s multiple compression trend, indicating increased investor confidence and valuation. Overall, GoDaddy appears to be on track for improved profitability and shareholder value.
