Jefferies said they agreed GoDaddy was a value game among website builders, with consistent execution and healthy cash flow generation after activist investor Starboard announced it had bought a stake of 6.5% in a web services company worth around $800 million.
Starboard, in its regulatory filing with the U.S. Securities and Exchange Commission, said the Arizona-based company’s stock was undervalued and presented an attractive investment opportunity.
Following that, GoDaddy shares jumped as much as 9.6% to hit an intraday high of $83.29 on Monday.
“We agree because our thesis has been on GoDaddy (GDDY) being a value play among website builders, with consistent execution and healthy cash generation. Even after today’s +9% move Today, the 14.8x EV/FCF 2nd NTM valuation is below the 15.9x 3-year average and at a steep discount to the 3-year FCF CAGR of 18%. product innovation delivered throughout FY21,” said Brent Thill, equity analyst at Jefferies.
“We like GoDaddy (GDDY) for its consistent execution, double-digit organic growth, strong uFCF generation and attractive valuation (14.8x EV/FCF 2nd NTM vs. 18% CAGR through 23; the multiple EV /S is also a reasonable 3.6x CY23E & 4.1x NTM for a subscription-based model.). Our 12-month price target of $110 (unchanged) is based on EV/FCF 19x.
GoDaddy Stock Price Predictions
Eight analysts who offered stock ratings for GoDaddy over the past three months forecast a 12-month average price of $95.63 with a high forecast of $112.00 and a low forecast of $81.00.
The average price target represents a 13.98% change from the last price of $83.90. Of these eight analysts, five rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.
Morgan Stanley gave the base price target of $81 with a high of $136 in a bullish scenario and $46 in a worst-case scenario. The company gave an “equal weight” rating on the shares of the internet domain registrar and the web hosting company.
“GoDaddy is a market leader in an under-exploited SMB Internet infrastructure market. The growth of the market is supported by a tailwind of increasing adoption of technology by small businesses to develop an online presence. Expanding the portfolio into horizontal applications to help SMBs and improving attach rates should drive higher ARPU and retention rates to fuel revenue growth,” noted Elizabeth Elliott, Equity Analyst. at Morgan Stanley.
“Stable, scaled growth and profitability gives us confidence in the cash flow growth estimates. We see an acquisition-heavy strategy limiting revaluation to a mix of software and Internet peers, as companies historically skewed by M&As are trading at an EV/S and EV/FCF discount to their peers. .
Several other analysts also updated their stock outlook. Citigroup raised the price target from $105 to $110. Truist Securities raised the target price from $110 to $112. Raymond James reduced the target price from $108 to $100. Berenberg raised the price target to $101 from $99.
Technical analysis also suggests that it is good to hold it for now, as the 50-200 Day MACD Oscillator and 100-200 Day MACD Oscillator are signaling a slight selling opportunity.
Check out the FX Empire Earnings Schedule