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Evercore downgraded GoDaddy (NYSE:GDDY) to In Line from Outperform citing the rating, following the company’s fourth-quarter results.
Analysts said GoDaddy (GDDY) reported a mixed fourth quarter, with revenue in line with Street, Bookings slightly lower the Street, and unleveraged free cash flow, or uFCF, and NEBITDA modestly ahead of the Street.
According to Evercore, the company’s revenue guidance for the first quarter of fiscal 2024 is near the high end, and its full-year uFCF and NEBITDA margin guidance is largely in line with expectations.
Analysts added that GoDaddy’s stock downgrade to In Line was largely a rating call. They had improved the shares in early ’23, and as of the company’s Q3 2023 results, the shares have appreciated by about 50%. Analysts agree with this rally, management has put the spotlight on material improvement in profitability and shareholder-friendly capital allocation strategies, which analysts say should continue to provide support to the stock’s valuation.
Analysts also expect to hear this continued cost discipline and commitment to shareholder returns at GoDaddy’s Investor Day on March 6, as well as new product innovations that they say could potentially boost revenue in 2024 and beyond.
Evercore continues to view GoDaddy (GDDY) as a great GARP/Value stock with strong FCF generation, positive secular tailwinds, and a potentially accelerating product innovation cadence.
That said, without material changes to analysts’ estimates or rating framework, they believe the risk/reward profile is relatively balanced, especially considering the stock’s recent rally. Hence the In-Line evaluation.
GoDaddy (GDDY) has a Hold rating in Seeking Alpha’s Quant Rating system, which consistently beats the market. Meanwhile, the average rating of Seeking Alpha authors (1 author in this case) is more positive with a Buy, as is the average rating of Wall Street analysts, Buy.
GDDY -3.12% at $109.50 in the February 14 premarket