On Monday, RBC Capital Markets updated its outlook on shares of GoDaddy Inc (NYSE:GDDY), increasing the price target to $175 from $145, while maintaining an Outperform rating on the shares. The revision follows GoDaddy's recent quarterly performance, which was highlighted as one of the company's strongest to date.
The firm's analysis pointed to GoDaddy's Apps & Commerce (A&C) segment, which saw a 24% acceleration in bookings, aligning with industry peers. The A&C segment's growth is significant as it contributes to both margin improvement and multiple expansion for the company. Additionally, the product Airo has been noted for its potential in boosting customer acquisition, engagement, and monetization.
According to the firm, GoDaddy has not only been meeting but also surpassing its own projections for margin and free cash flow (FCF), which bolsters the narrative of an appealing combination of multi-year growth and capital returns. This performance has prompted RBC Capital Markets to adjust their estimates upward.
The firm's commentary underscored the strong results of GoDaddy's second quarter, stating, "GDDY's Q2 print was one of its strongest yet. The margin accretive/multiple-expanding Apps & Commerce (A&C) segment accelerated bookings again to 24% (in line with peers), Airo is showing solid promise of rising customer acquisition, engagement and monetization and lastly, the company continues to outperform its own raised margin and FCF expectations setting up an even more attractive multi-year growth + capital return story. Raising our estimates, target moves to $175; reiterate Outperform."
Investors and market watchers will likely keep an eye on GoDaddy's stock performance following this updated guidance from RBC Capital Markets.
In other recent news, GoDaddy delivered a robust performance in Q2 of fiscal year 2024, with a 7% increase in total revenue to $1.1 billion. The Applications and Commerce segment saw a growth of 15% to $406 million. The company's strategic initiatives, such as the expansion of AI-powered GoDaddy Airo and the launch of new SaaS plans, are aimed at driving subscription revenue. Based on these results, GoDaddy has raised its full-year revenue guidance to between $4.525 billion and $4.565 billion.
The company expects mid-teens growth for the Applications and Commerce segment and low single-digit growth for the core platform segment in Q3 and the full year. Despite carrying a net debt of $3.4 billion, GoDaddy remains optimistic about its AI initiatives, including GoDaddy Airo and GABI, a customer service tool. These developments reflect the company's ongoing commitment to innovation, global expansion, and delivering value to its shareholders.
InvestingPro Insights
Following RBC Capital Markets' optimistic update on GoDaddy Inc (NYSE:GDDY), InvestingPro data reinforces the positive sentiment, showing a robust market capitalization of $21.32 billion. The company's P/E ratio stands at an attractive 12.34, suggesting that the stock may be reasonably valued relative to its earnings.
Importantly, GoDaddy's revenue has grown by 5.91% over the last twelve months as of Q2 2024, indicating a healthy expansion in its business activities. This growth is complemented by a strong gross profit margin of 63.16%, highlighting the company's efficiency in managing its cost of goods sold.
InvestingPro Tips further enrich the narrative, with GoDaddy's aggressive share buyback strategy and high shareholder yield showcasing a commitment to returning value to investors. The stock's low price volatility could appeal to investors looking for stability in their portfolio. For those considering an investment in GoDaddy, it's worth noting that the company is anticipated to maintain profitability this year, a sentiment echoed by analysts. Moreover, GoDaddy's strong returns over the last year, with a price total return of 117.06%, reflect a robust performance in the market.
For detailed analysis and additional insights, investors can explore the full suite of InvestingPro Tips, which includes a total of 17 tips for GoDaddy Inc, available at Investing.com.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.