On Friday, UBS has increased the price target for GoDaddy Inc (NYSE:GDDY) to $130 from the previous $118, while keeping a Neutral rating on the stock. The adjustment comes in response to GoDaddy's updated mid-point revenue guidance for fiscal year 2024, which the firm views as conservative. This revision reflects a smaller dollar increase compared to the revenue outperformance reported for the first quarter of 2024.
The analyst notes that the new price target factors in the modest increase to the mid-point revenue guidance for FY24. Despite the conservative nature of the guidance, the potential challenges in predicting continued success in aftermarket domains are recognized. The firm's Free Cash Flow (FCF) estimates for GoDaddy have been slightly raised following the company's first-quarter performance, even though GoDaddy reiterated its FY24 FCF guidance of at least $1.4 billion.
GoDaddy's exploration of new strategies for improved monetization, such as the introduction of a paywall, has been acknowledged by UBS. However, the firm is awaiting further evidence of the incremental benefits of these strategies. The analyst's commentary reflects a cautious stance, indicating a desire for more tangible results before adopting a more positive outlook on the stock.
As of now, GoDaddy shares are trading at nearly 15 times the forecasted FY24 Free Cash Flow, which according to UBS, seems to be a full valuation. This assessment is based on the company's three-year Free Cash Flow per Share Compound Annual Growth Rate (CAGR) of 20%. The current share price and valuation metrics are taken into account in the context of GoDaddy's financial projections and market performance.
InvestingPro Insights
With UBS updating its price target for GoDaddy Inc (NYSE:GDDY), investors may benefit from additional context provided by real-time data and insights from InvestingPro. GoDaddy's market capitalization stands at $17.65 billion, and the company's P/E ratio is currently 13.38, with an adjusted P/E for the last twelve months as of Q1 2024 at a lower 9.7. This adjustment may indicate a more attractive valuation when considering recent earnings. The company's revenue growth for the same period shows a healthy 4.9% increase, with a notable 7.0% quarterly revenue growth in Q1 2024.
Two InvestingPro Tips worth mentioning are the aggressive share buybacks by management, highlighting a possible confidence in the company's value, and the high shareholder yield, which could be attractive for investors seeking returns. Additionally, GoDaddy's stock has shown a high return over the last year, with a 74.13% price total return, and it's currently trading near its 52-week high, at 97.78% of the peak price.
For those interested in a deeper analysis, there are 12 additional InvestingPro Tips available for GoDaddy, which can be accessed at https://www.investing.com/pro/GDDY. To enhance your investment research on GoDaddy or other stocks, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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