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On Wednesday, GoDaddy Inc (NYSE:) experienced a shift in its stock rating as Evercore ISI adjusted its stance on the company’s shares. The firm downgraded GoDaddy from “Outperform” to “In Line,” while simultaneously raising the price target to $110 from the previous $100. This change in rating is attributed to a valuation call following a significant increase in the company’s share price since the third quarter of 2023.
GoDaddy reported its fourth-quarter results, which showed revenue matching Wall Street expectations and bookings slightly below. However, the company surpassed expectations in terms of unlevered free cash flow (uFCF) and net earnings before interest, taxes, depreciation, and amortization (NEBITDA). The guidance for the first quarter and full year 2024 suggests that revenue could potentially exceed expectations, with uFCF and NEBITDA margin forecasts aligning closely with market projections.
Despite the downgrade, the firm acknowledges GoDaddy’s approximately 50% stock appreciation since the third-quarter report of 2023. This surge is credited to management’s focus on profitability improvements and strategies aimed at enhancing shareholder value. These factors are expected to continue providing support to the stock’s valuation.
Evercore ISI also anticipates that GoDaddy’s upcoming Investor Day on March 6th will highlight the company’s ongoing cost discipline and dedication to shareholder returns. Additionally, the event may introduce new product innovations that could drive revenue growth in 2024 and beyond.
In closing, Evercore ISI recognizes GoDaddy as a strong growth at a reasonable price (GARP)/Value stock with robust free cash flow generation and positive market trends. However, without significant changes to estimates or valuation frameworks, the firm sees the risk/reward profile for GoDaddy’s stock as relatively balanced, especially considering the recent run-up in its price.
InvestingPro Insights
GoDaddy Inc (NYSE:GDDY) has demonstrated noteworthy performance and valuation metrics that align with the recent changes in stock rating by Evercore ISI. According to InvestingPro, the company has been actively engaged in enhancing shareholder value, as evidenced by management’s aggressive share buyback strategy, which is one of the InvestingPro Tips that may interest potential investors. Moreover, GoDaddy’s stock has been trading near its 52-week high, reflecting strong market confidence.
The InvestingPro Data paints a detailed financial picture of GoDaddy. With a market capitalization of $15.95B USD, the company’s P/E Ratio stands at 47.87, which, while high, aligns with the firm’s high earnings multiple and EBITDA valuation multiple. This could signal robust future expectations from investors. Additionally, GoDaddy has shown a solid revenue growth of 3.02% over the last twelve months as of Q3 2023, indicating a steady upward trajectory for the company’s financial performance.
Investors looking for comprehensive insights can find additional InvestingPro Tips for GoDaddy, which delve deeper into the company’s financial health and market performance. For those considering an investment in GoDaddy or seeking to understand the full scope of the company’s potential, InvestingPro offers a total of 15 tips. As a special promotion, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking further valuable investment analysis and data.
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