Piper Sandler has updated its outlook on GoDaddy Inc (NYSE: NYSE:GDDY), raising the price target to $160 from $145 while maintaining an Overweight rating on the stock.
The firm's optimism is based on GoDaddy's second-quarter performance, which showed a significant improvement in gross bookings.
Gross bookings for the quarter saw an 11% rise on a constant currency basis, with a notable acceleration in the Applications & Commerce segment, which grew by 24% year-over-year.
"Gross Bookings in 2Q improved to 11% constant currency growth, heavily driven by another quarter of acceleration in Applications & Commerce bookings which rose to 24% growth y/y, said the analyst.
This growth has been attributed to effective pricing and bundling strategies that have shifted the bookings trend positively.
The company's EBITDA also reflected a robust quarter, matching the previous quarter's 25% year-over-year growth. This has resulted in a 29% normalized margin, which was achieved ahead of the anticipated schedule. The financial firm noted this performance despite GoDaddy's stock already experiencing a 37% year-to-date increase.
Piper Sandler's analyst highlighted the company's financial strategy, indicating a planned 20% compound annual growth rate (CAGR) in free cash flow per share over the next three years. This projection is supported by the expectation of a continued trend of high single-digit booking growth.
The firm's continued recommendation of GoDaddy as a stock with upside potential is based on the company's strong financial indicators and the trajectory of its bookings and margins.
InvestingPro Insights
GoDaddy Inc (NYSE:GDDY) has been a beacon of stability and growth, as highlighted by Piper Sandler's updated outlook and price target increase. The InvestingPro data corroborates the company's strong performance with a solid revenue growth of 4.9% over the last twelve months as of Q1 2024. Additionally, GoDaddy's EBITDA growth is impressive, registering a 22.74% increase in the same period. This growth is a testament to the company's robust operational efficiency, as reflected in its operating income margin of 17%.
InvestingPro Tips suggest that GoDaddy's management has been proactive in enhancing shareholder value through aggressive share buybacks, contributing to a high shareholder yield. Moreover, the stock is known for its low price volatility, which might appeal to investors looking for stability in their portfolio. While the net income is expected to drop this year, analysts remain optimistic about the company's profitability, with predictions of continued earnings into the year.
For investors considering GoDaddy, there are more InvestingPro Tips available that delve deeper into the company's financial health and future outlook. Currently, there are 16 additional tips listed on InvestingPro, which can provide a comprehensive analysis for those looking to make an informed investment decision.
With a market capitalization of $19.93 billion and trading near its 52-week high, GoDaddy's current performance and future projections indicate its position as a potentially attractive investment. The company's strategy and financials present a compelling case for investors, further enriched by the insights from InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.