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Investing.com -- Raymond James raised its rating on Doximity to Strong Buy from Outperform, saying the recent pullback after quarterly results left the stock trading near 25x free cash flow, a level the brokerage views as too low given the company’s long term growth profile.
The firm said questions around seasonality and guidance have overshadowed what it sees as improving visibility.
It pointed to faster adoption of workflow tools, gains from multi product bundles and rising use of the client portal as signs that Doximity’s share gains are durable.
It added that the company has historically grown two to three times faster than digital ad budgets, a trend it expects to continue.
Raymond James said annual growth rates of 15 to 18 percent from 2023 to 2025 provide a clearer picture than quarter to quarter swings.
While the company guided to slower growth in the second half of the fiscal year, the brokerage said past patterns show seasonal swings do not signal longer term deceleration and it remains comfortable expecting double digit growth.
The firm set a $65 price target, which assumes Doximity trades at 35x its 2026 free cash flow estimate. It noted the stock now trades at a discount to vertical software peers despite usually commanding a premium, and that past breaks below 25x free cash flow have been buying opportunities.
Raymond James added that concerns over “uncertainty” in pharma spending are more about timing of commitments than budget cuts and sees room for gains if spending shifts from direct to consumer marketing toward healthcare professionals.
It also said new AI tools such as DocsGPT, Scribe and Pathways could lift engagement and provide another source of growth over time.