BofA cautious on Doximity

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BofA analysts said in a note to clients Wednesday that the firm remains cautious on Underperform rated Doximity, Inc. (NYSE:DOCS).

The analysts, who have a $27 per share price target on the stock, told investors in their research memo that “according to findings from the Standard Media Index (SMI) shared with Marketing Dive, pharma advertising spending grew 8% y/y in November.”

“This represents a deceleration from 12% and 13% growth in September and October, but above low-to-mid single digits declines in May-July,” they wrote.

The analysts explained that the weakness in the SMI Index over the summer is consistent with Doximity and peers’ commentary, although “very limited historical information available to draw broader conclusions.”

However, BofA noted that the inflection in ad spending observed by the Index from September to October runs counter to its most recent survey, which indicates budgets are expected to be flat over the next twelve months.

“Our survey respondents expect digital spend to increase 3% over the next twelve months versus no change for budgets more broadly this compares to Street estimates for DOCS of 22-23% revenue growth next year. We remain cautious on DOCS given our survey found other digital peers may be taking share and may be using price to do so. With that being said, recent data points from the SMI Index does indicate that pharma advertising spend has improved from declines in the summer,” the analysts concluded.