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On Tuesday, Morgan Stanley (NYSE:MS) adjusted its stance on IONOS, the European web hosting company, downgrading its stock rating from Overweight to Equalweight and setting a new price target of €38.00, up from the previous target of €32.70. The revision reflects Morgan Stanley’s assessment of IONOS’s valuation in comparison to its peer, GoDaddy (NYSE:GDDY).
Morgan Stanley’s analysis indicates that IONOS’s year-to-date performance has been strong, leading to a significant narrowing of the valuation gap between IONOS and GoDaddy. Historically, IONOS traded at a substantial discount to GoDaddy, ranging from 30-50% on a comparable basis. This gap has now reduced notably, with IONOS’s current valuation showing only about a 9% discount to GoDaddy when adjustments are made for share-based compensation intensity and normalized tax charges.
The downgrade comes despite Morgan Stanley’s recognition of IONOS’s solid new customer acquisition and its position in the fragmented European web presence markets. The firm acknowledges the potential role IONOS could play in the European cloud landscape but suggests that GoDaddy’s larger scale, liquidity, and shareholder structure might justify a valuation premium.
Both IONOS and GoDaddy are expected to exhibit similar revenue growth dynamics, with forecasts of 7-8% growth in 2026. However, the analyst points out that on a headline level, IONOS appears to trade at a more than 20% premium over GoDaddy, which is adjusted once different levels of compensation intensity and tax charges are factored in.
The adjustment in IONOS’s stock rating and price target reflects Morgan Stanley’s current view on the company’s valuation relative to GoDaddy, particularly considering stock dynamics and the narrowed discount in free cash flow multiples. The firm’s analysis is based on the trading patterns and performance of both companies up to the close of markets last Friday.
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