On Friday, Evercore ISI updated its price target for Doximity Inc (NYSE: NYSE:DOCS), a digital platform for medical professionals, raising it to $29 from $28. The firm has maintained an "In Line" rating for the stock. The adjustment follows Doximity's recent performance, which was noted to be solid, especially considering the deteriorating investor expectations prior to the company's earnings report.
According to the firm, Doximity has consistently shown profitability, even though its growth outlook might be slightly slower than what analysts had anticipated. The company's client portal, which is gaining traction with the launch of its reporting tools, is expected to enter the next phase of development. This phase will include purchasing capabilities and pricing tools, projected to be launched within this quarter.
Evercore ISI also highlighted that Doximity provided additional clarity regarding why deferred revenues might not be the most accurate metric for evaluating the company's performance. This information can be found in Doximity's revenue recognition and billing FAQ.
The firm's analyst pointed out that while there is an anticipation of a post-earnings re-rating of Doximity's stock, the decision to maintain the "In Line" rating is influenced by a combination of factors. These include the slightly lower top-line growth forecast, as well as uncertainties in the macroeconomic environment that could potentially impact advertising demand.
This is particularly relevant for upsells and the upcoming renewal cycle, which are important revenue streams for Doximity. The new price target of $29 is based on approximately 21 times the company's projected CY24 EBITDA.
InvestingPro Insights
In light of Evercore ISI's recent price target update for Doximity Inc (NYSE: DOCS), a deeper dive into the company's financial health and market performance reveals several key insights. Doximity's aggressive share buyback strategy, as noted in an InvestingPro Tip, is a strong signal of management's confidence in the company's value. Additionally, the company's robust gross profit margin of 88.94% for the last twelve months as of Q3 2023, coupled with a substantial operating income margin of 35.01%, underscores its efficiency and profitability in operations.
InvestingPro Data also shows that Doximity holds a market capitalization of $4.43 billion and is trading at a high earnings multiple, with a P/E ratio of 33.01. Despite this, analysts have a positive outlook, predicting the company to be profitable this year. This aligns with the reported revenue growth of 16.58% and EBITDA growth of 36.21% in the same period, indicating a strong upward trajectory for the company's financial performance.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available, including insights into Doximity's cash versus debt position and its liquidity. To explore these valuable tips and make more informed investment decisions, consider subscribing to InvestingPro using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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