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On Monday, Wells Fargo (NYSE:WFC) initiated coverage on GoDaddy Inc (NYSE: NYSE:GDDY), assigning an Equal Weight rating to the company’s shares with a price target of $198.00. The stock, currently trading at $212.65, has demonstrated remarkable momentum with a 97.5% return over the past year, according to InvestingPro data. The new coverage comes as GoDaddy has seen an uptick in its Applications & Commerce (A&C) segment growth, which surged from 11% in the third quarter of 2023 to 18% in the same period in 2024. This increase is attributed to optimizations made to the pricing and merchandising of its productivity products at the point of renewal.
GoDaddy’s overall gross bookings also experienced an acceleration, growing from 4% in the third quarter of 2023 to 9% in the third quarter of 2024. This growth has led to a significant re-rating of GoDaddy’s stock, which went from trading at 11.0 times consensus CY+2 EBITDA in June 2023 to 18.0 times in December 2024. InvestingPro analysis reveals the company maintains a healthy revenue growth of 6.85% and strong profitability metrics, with 13 additional ProTips available to subscribers.
Currently, GoDaddy is trading at approximately 19.0 times consensus 2026 EV/EBITDA, with InvestingPro showing a current EV/EBITDA multiple of 32.45x. This valuation is more than two standard deviations above its average multiple over the last decade and exceeds its previous peak of around 17 times multiple in 2018. The stock’s present valuation reflects its recent performance and investor anticipation of future growth, though InvestingPro’s Fair Value analysis suggests the stock may be overvalued at current levels.
The Wells Fargo analyst believes that the central point of discussion regarding GoDaddy’s stock is whether the continued rollout of pricing optimizations to domains and the introduction of AI-optimized tools will further propel the growth of gross bookings beyond the 9% seen in the third quarter of 2024. If this growth is realized, it could potentially justify an even higher re-rating of the stock.
In other recent news, GoDaddy Inc. has been the subject of several significant developments. Citi reaffirmed its Buy rating for the company with a steady price target of $251, highlighting their anticipation of GoDaddy delivering robust performance. This optimism is echoed by Baird and RBC Capital Markets, which have raised their price targets for the company, citing confidence in GoDaddy’s Airo platform and its potential for growth. In contrast, Oppenheimer reiterated a Perform rating on GoDaddy shares, emphasizing the positive impact of the Airo and Airo Plus offerings on improving customer engagement and monetization.
GoDaddy has also successfully completed a $1.46 billion refinancing of its existing credit facilities, a strategic move expected to provide enhanced financial flexibility. This development is part of the company’s ongoing efforts to optimize its capital structure and reduce its cost of capital.
Furthermore, GoDaddy has reported a 7% year-over-year increase in total revenue for the third quarter, reaching $1.15 billion. A significant portion of this success is attributed to the company’s Applications & Commerce segment, which experienced a 16% growth in revenue.
These recent developments underscore GoDaddy’s strategic direction and commitment to growth, as well as the market’s positive reception to these efforts.
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