DigitalOcean stock rating reiterated at Market Outperform by JMP

Investing.com - JMP Securities has reiterated its Market Outperform rating and $55.00 price target on DigitalOcean (NYSE:DOCN), currently trading at $35.42, ahead of the company’s Deploy 2025 London conference scheduled for Thursday, October 2. According to InvestingPro data, analyst targets range from $32 to $55, with the company maintaining a "GREAT" financial health score.

The research firm noted that DigitalOcean stock has increased 4% year to date, underperforming compared to the Russell 3000’s approximately 13% gain during the same period. The company’s revenue has grown 13.3% over the last twelve months, with a strong gross profit margin of 60.4%.

JMP views DigitalOcean as an attractive opportunity for long-term capital appreciation, citing the company’s mission of simplifying cloud and AI services and its strong product-market fit with Digital Native Enterprises that face challenges with complexity, cost, and vendor lock-in from larger cloud providers.

The firm highlighted DigitalOcean’s target market of public cloud services for digital natives, which represents a $140 billion-plus addressable opportunity growing at over 20% year-over-year.

JMP also expressed confidence in DigitalOcean’s dual-cloud solution, which combines a full-stack general-purpose cloud with the GradientAI unified AI cloud, and praised the leadership team including CEO Paddy Srinivasan, Chief Product and Technology Officer Bratin Saha, and CFO Matt Steinfort.

In other recent news, DigitalOcean Holdings Inc. reported its second-quarter earnings for 2025, exceeding market expectations. The company achieved an earnings per share (EPS) of $0.59, surpassing the forecasted $0.47, and generated revenue of $219 million, slightly above the anticipated $216.7 million. In addition to strong earnings, DigitalOcean successfully closed a $625 million convertible notes offering, which included the full exercise of an option to purchase an additional $75 million in notes. This offering is part of a broader strategy that initially involved pricing a $550 million convertible notes offering, which was increased from a previously announced $500 million.

The convertible senior notes, due 2030, are unsecured and carry no regular interest payments. The company expects to use the net proceeds of approximately $605.6 million for general corporate purposes. These recent developments follow DigitalOcean’s announcement of its intent to offer $500 million in convertible senior notes, with an option for an additional $75 million, in a private placement to qualified institutional buyers.

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