Piper Sandler Upgrades GoDaddy Shares to Overweight, Raises Price Target

Summary

  • Piper Sandler analysts have upgraded GoDaddy shares from Neutral to Overweight, raising the price target to $121.
  • This boost in price target is based on a lower discount rate and higher terminal Free Cash Flow (FCF) multiple (DCF).
  • Despite a challenging 2023 for Commerce Tech, analysts see potential for positive growth in quality names in 2024.
  • Analysts anticipate a 29% NEBITDA margin exit rate in 2023 and 8% Domains bookings growth in the last quarter.
  • This positive growth could potentially reverse a tiring five-year trend of multiple compression at GDDY.

Piper Sandler’s Updated Outlook on GoDaddy

In a recent commerce tech coverage note to clients, Piper Sandler analysts upgraded GoDaddy (NYSE:) shares to Overweight from Neutral. Along with this, the price target was raised from $100 to $121 per share.

Reasons for the Price Target Upgrade

According to the research note, this price target increase results from a lower discount rate and improved terminal FCF multiple (DCF).

Commerce Tech Future Outlook

The Piper Sandler firm remarked on the challenges faced by Commerce Tech in 2023. However, moving towards 2024, they anticipate the possibility of positive growth revisions in their top-quality names while maintaining profitability progression.

Potential Growth and Profitability

“Given the rapid progression of margins positioning GDDY for a 29% NEBITDA margin exit rate in 2023 and concurrent with the 8% growth in Domains bookings in the last quarter; we genuinely believe in the potential for high single-digit growth in FY24 with a NEBITDA margin of over 30%,” added the analysts.

Reversing the trend at GDDY

In relation to GoDaddy, these analysts further pointed out the potential for this growth to establish a turnaround from the long-standing five-year trend of multiple compression.

This outlook and upgrades on GoDaddy can have potential implications on the trading and forex market. Investors and traders may want to closely watch GDDY and related assets due to this upgraded rating and future growth possibilities.

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