On Thursday, Morgan Stanley adjusted its outlook on GoDaddy Inc (NYSE:GDDY), a well-known internet domain registrar and web hosting company. The firm increased the price target to $132 from the previous $120, while maintaining an Equalweight rating on the stock.
The revision reflects Morgan Stanley's recognition of GoDaddy's commanding position in the small and medium-sized business (SMB) Internet infrastructure sector, which is still largely untapped. The analyst pointed out that the market is experiencing a positive trend, with more small businesses adopting technology to establish an online presence.
GoDaddy's strategy to broaden its portfolio through horizontal applications is anticipated to provide significant support to SMBs. This, in turn, is expected to enhance attachment rates, which would contribute to higher average revenue per user (ARPU) and improved retention rates. These factors are believed to be key drivers for accelerating revenue growth for the company.
The firm also cited GoDaddy's capacity for consistent growth and profitability as a basis for confidence. The company's share repurchase programs bolster these aspects. Morgan Stanley anticipates that these elements will collectively contribute to an increase in cash flow per share growth estimates for GoDaddy.
The price target adjustment by Morgan Stanley comes as GoDaddy continues to capitalize on the expanding need for digital infrastructure among SMBs, a sector that has shown resilience and growth potential.
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