On Friday, Goldman Sachs (NYSE:GS) initiated coverage on Doximity Inc (NYSE: NYSE:DOCS) stock, a leading digital platform for medical professionals. The investment firm set a Neutral rating on the company's stock, accompanied by a 12-month price target of $58.00.
The coverage begins with a balanced perspective on Doximity's business prospects. The firm acknowledges Doximity's attractive end-market and leadership position, forecasting a steady category performance. This performance is expected to result in a compound annual growth rate (CAGR) of 9-10% in revenue from the fiscal year 2025 to the fiscal year 2028.
The analyst expressed confidence in Doximity's ability to meet its fiscal year 2025 guidance and exceed current Street revenue forecasts. This optimistic outlook is supported by the company's recent second-quarter fiscal year 2025 beat-and-raise, indicating growth in its core customer base.
Goldman Sachs also sees a potential for consistent EBITDA margin expansion for Doximity. The projections suggest an increase of 180 basis points from the fiscal year 2025 to the fiscal year 2028. The firm's assessment points to a strong financial trajectory for Doximity, with solid fundamentals underpinning its growth.
The Neutral rating indicates that while Goldman Sachs sees positive elements in Doximity's business model and financial outlook, it also suggests a cautious approach to the stock at the present time. The price target of $58.00 reflects the firm's evaluation of the company's current value and future prospects within the context of the broader market.
In other recent news, Doximity Inc. showcased robust financial results for the second quarter of fiscal year 2025, with revenues reaching $137 million, a 20% increase year over year.
The company also reported a record adjusted EBITDA margin of 56%, translating to $76 million, a 41% increase from the previous year. Active user engagement metrics also saw growth, with over 600,000 active prescribers and more than 1 million Doximity GPT prompts in Q2.
Truist Securities revised its revenue estimates for Doximity, now expecting $540 million for FY25, an increase from the prior estimate of $523 million. The firm also adjusted its forecast for FY26, raising the revenue expectation to $603 million. Truist raised Doximity's price target to $49, while maintaining a Hold rating on the stock.
Morgan Stanley (NYSE:MS) upgraded Doximity stock from Underweight to Equalweight, despite citing a stretched valuation. Meanwhile, Canaccord Genuity downgraded the stock from Buy to Hold, suggesting the market's high growth expectations are now factored into the stock's valuation.
Recent developments include the introduction of a new client portal, now used by over 40% of pharma clients, with full rollout expected in early 2025. For the third quarter, Doximity projects revenue to be between $152 million and $153 million, with adjusted EBITDA estimated at $83 million to $84 million.
Despite anticipating Q4 revenue challenges and increased operational expenses, the company has raised its full-year revenue guidance to between $535 million and $540 million.
InvestingPro Insights
Doximity's financial metrics and market performance offer additional context to Goldman Sachs' Neutral rating. According to InvestingPro data, Doximity boasts impressive gross profit margins of 89.94% for the last twelve months as of Q2 2025, underscoring the company's operational efficiency. This aligns with Goldman Sachs' projection of consistent EBITDA margin expansion.
The company's revenue growth of 15.29% over the same period, coupled with a strong quarterly revenue growth of 20.44% in Q2 2025, supports the analyst's confidence in Doximity meeting its fiscal year 2025 guidance. However, investors should note that the stock is trading at a high P/E ratio of 55.68, which may explain Goldman's cautious Neutral stance.
InvestingPro Tips highlight that Doximity has a perfect Piotroski Score of 9, indicating strong financial health. Additionally, the company holds more cash than debt on its balance sheet, which could provide flexibility for future growth initiatives. These factors contribute to the positive outlook on Doximity's financial stability and growth potential.
For investors seeking a more comprehensive analysis, InvestingPro offers 18 additional tips for Doximity, providing a deeper understanding of the company's financial position and market performance.
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