UBS raises GoDaddy stock target ahead of Investor Day

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The adjustment comes in light of GoDaddy’s initial fiscal year 2024 guidance, which anticipates 5-7% year-over-year revenue growth and nEBITDA margins of around 29%. UBS’s estimates are slightly below the Street’s expectations of 7.1% revenue growth and a 29.3% margin. The firm noted that GoDaddy’s free cash flow (FCF) multiple has seen roughly a 30% increase since the lows of October 2023, driven by positive commentary in the fourth quarter of 2024 that led UBS to raise its nEBITDA forecast for FY24 by 8% last quarter.

The analysis by UBS suggests that for further multiple expansion, GoDaddy would need to demonstrate accelerated revenue growth or margin expansion. However, the firm’s expectations are tempered, anticipating that the upcoming March 6 Investor Day will likely present a balanced medium-term outlook with modest upside to the consensus on revenue, nEBITDA, and FCF per Share 3-Year Compound Annual Growth Rates (CAGRs) of 7%, 12%, and 15%, respectively.

UBS also expressed optimism about GoDaddy’s product strategy, particularly the potential of Airo to increase product attachment rates and the applications of GenAI to reduce costs. In conclusion, with GoDaddy’s shares trading around $113, UBS believes the current risk/reward ratio, which ranges from $75 to $135, appears balanced, as the market awaits further details from the company’s medium-term outlook at the Investor Day event scheduled for March 6, 2024.

As GoDaddy Inc (NYSE:GDDY) aligns its strategic initiatives with financial performance, current metrics from InvestingPro paint a detailed picture of the company’s valuation and market sentiment. With a Market Cap of $15.57 billion and a P/E Ratio adjusted for the last twelve months as of Q4 2023 at 11.22, GoDaddy is positioned as a substantial player in the internet domain and web hosting sector.

InvestingPro Tips indicate that GoDaddy’s management has been actively buying back shares, signaling confidence in the company’s value and future prospects. Additionally, the stock is noted for trading with low price volatility, which may appeal to investors looking for stability in their portfolio. For those considering a deeper dive into GoDaddy’s financials, InvestingPro offers additional tips, such as the company’s high EBITDA valuation multiple and its performance near a 52-week high, which could be essential factors in evaluating the stock’s current standing.

Highlighted by a strong return over the last three months, with a 24.72% price total return, GoDaddy’s recent performance underscores the optimism reflected in UBS’s raised price target. Furthermore, the company’s revenue growth in the last twelve months as of Q4 2023 stands at 3.98%, slightly below UBS’s revised forecast, yet indicative of steady progress. GoDaddy’s Gross Profit Margin during the same period is an impressive 63.01%, showcasing the company’s ability to maintain profitability amidst operational challenges.

For investors seeking comprehensive analysis and additional insights, InvestingPro provides a total of 14 tips on GoDaddy, which can be accessed at https://www.investing.com/pro/GDDY. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking further in-depth analysis and data to inform investment decisions.

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