Raymond James cuts Doximity price target to $65 from $83

On Friday, Raymond (NSE:RYMD) James analyst Brian Peterson adjusted the price target for Doximity Inc (NYSE:DOCS) stock, bringing it down to $65.00 from the previous $83.00, while continuing to recommend the stock with an Outperform rating. According to InvestingPro data, nine analysts have recently revised their earnings estimates upward for the upcoming period. Peterson noted that Doximity’s fourth fiscal quarter results surpassed their projections, although with less margin than in previous quarters, and provided a fiscal year 2026 outlook that was below consensus. The company maintains impressive gross profit margins of 90.2%, showcasing strong operational efficiency.

Doximity’s shares are anticipated to decline due to the reduced momentum in growth, as indicated by the more modest outperformance in the fourth fiscal quarter results. This comes despite the increased predictability provided by product launches in January. The post-market reaction saw the stock fall by over 20%, which Peterson described as an overreaction. Despite market volatility, InvestingPro analysis indicates the company maintains strong financial health with a "GREAT" overall score and a comfortable current ratio of 6.97, suggesting robust liquidity.

The initial outlook for fiscal year 2026 has been cautiously adjusted to account for potential macroeconomic factors, yet there have been no apparent signs of weakening in the company’s performance. The company’s revenue growth remains solid at 19.98% over the last twelve months. Peterson highlighted that Doximity’s backlog growth at the start of the year showed a robust year-over-year increase of 20%. Get deeper insights into Doximity’s growth potential and 13 additional key metrics with a subscription to InvestingPro.

Peterson also emphasized Doximity’s focus on research and development, particularly in artificial intelligence, which could lead to new avenues for revenue generation. This potential "third act" of monetization adds to the company’s existing strengths, even as its workflow solutions, referred to as the "second act," are still developing.

In his commentary, Peterson reiterated his belief in Doximity’s fundamental strengths, which he refers to as the "3 Ms": moat, margins, and management team. The progress made in fiscal year 2025 on initiatives such as the client portal, new product introductions, and multi-module buying has reinforced his confidence in Doximity’s sustained growth rate.

In other recent news, Doximity Inc. reported its fourth-quarter earnings for fiscal year 2025, surpassing Wall Street expectations with an earnings per share (EPS) of $0.38, exceeding the forecasted $0.27. The company achieved revenue of $138.3 million, above the anticipated $134.03 million, marking a 17% year-over-year increase. Despite this strong financial performance, Evercore ISI downgraded its price target for Doximity from $60 to $50, maintaining an "In Line" rating. The adjustment reflects concerns over potential policy uncertainty affecting pharmaceutical companies and a cautious revenue outlook for fiscal year 2026.

Doximity’s management has indicated that revenue guidance may start at the lower end of the typical market growth rate of 5-7%, citing macroeconomic uncertainties. The company’s full fiscal year revenue reached $570.4 million, marking a 20% increase from the previous year, with an adjusted EBITDA of $313.8 million, representing a 55% margin. Free cash flow increased by 56% year-over-year in Q4, reaching $97 million. Despite these positive results, the stock experienced a significant aftermarket decline, which may reflect investor concerns over broader market trends or company guidance.

Looking ahead, Doximity provided revenue guidance for FY2026 in the range of $619 million to $631 million, signaling a 10% growth. The company plans to increase investments in AI technologies, although it remains cautious due to macroeconomic uncertainties. Evercore ISI acknowledged Doximity as a structural share winner but removed it from the Tactical Outperform List due to short-term risks posed by potential policy changes.

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