On Thursday, Cantor Fitzgerald began coverage on shares of GoDaddy Inc (NYSE:GDDY), issuing a Neutral rating and setting a price target of $170. The firm highlighted the company's positive fundamental outlook over the next 12-18 months, citing expected sustained benefits from its cross-selling strategies and AI-driven monetization efforts for new and existing customers.
GoDaddy, known for providing internet domain registration and web hosting services, is anticipated to continue improving its margins through customer support optimization and other fixed cost efficiencies. Cantor Fitzgerald expressed confidence in GoDaddy's ability to meet and potentially surpass its medium-term financial goals.
The analyst's cautious stance is influenced by GoDaddy's year-to-date performance, which has seen the stock surge by 58% compared to the Nasdaq's 18% increase. The current valuation of GoDaddy at 14.8 times price to free cash flow per share, which is higher than the three-year average of 10 times, also contributed to the neutral outlook.
Despite the optimism regarding GoDaddy's fundamentals, Cantor Fitzgerald anticipates limited potential for multiple expansion or revisions to estimates. The $170 price target for the next 12 months is based on a 15 times multiple of the fiscal year 2025 estimated price to free cash flow.
In other recent news, GoDaddy Inc. has been the subject of recent analyst attention due to its strong financial performance. The company reported a 7% increase in total revenue for Q2, reaching $1.1 billion. This robust performance was driven by a 15% growth in the Applications and Commerce segment. Following these results, GoDaddy raised its full-year revenue guidance.
Financial analyst firm Benchmark raised its price target for GoDaddy from $170 to $186, maintaining a Buy rating. This adjustment was influenced by GoDaddy's Free Cash Flow per Share (FCF/share) Compound Annual Growth Rate (CAGR) target for the years 2024 to 2026. Similarly, RBC Capital Markets increased its price target for GoDaddy from $145 to $175, maintaining an Outperform rating, following GoDaddy's strong Q2 performance.
Despite carrying a net debt of $3.4 billion, GoDaddy remains committed to its AI initiatives, including GoDaddy Airo and GABI, a customer service tool.
InvestingPro Insights
As Cantor Fitzgerald initiates coverage on GoDaddy Inc (NYSE:GDDY), the company's recent performance and market metrics provide additional context for investors. GoDaddy's management has shown confidence in the company's prospects through aggressive share buybacks, as noted in one of the InvestingPro Tips. This aligns with the firm's positive fundamental outlook and could be a signal of underlying strength in the company's strategy and future performance.
InvestingPro Data indicates a robust market capitalization of $22.17 billion, reflecting the company's significant presence in the market. With a P/E ratio of 12.41 and an adjusted P/E ratio for the last twelve months as of Q2 2024 at 12.03, GoDaddy trades at multiples that suggest investor confidence in its earnings capacity. Moreover, the company has demonstrated revenue growth of 5.91% over the last twelve months, showcasing its ability to expand its top-line in a competitive environment.
While the stock has been trading with low price volatility, an InvestingPro Tip suggests that GoDaddy is trading at a high EBITDA valuation multiple, indicating that the market may have high expectations for the company's future earnings before interest, taxes, depreciation, and amortization. Investors should consider this in the context of GoDaddy's 115.61% one-year price total return, which significantly outperforms the broader market.
For those looking to delve deeper into GoDaddy's financial health and future prospects, InvestingPro offers additional tips, with 14 more available on their platform. These insights could provide valuable guidance for investors weighing the potential risks and rewards of adding GoDaddy to their portfolios.
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