On Wednesday, RBC Capital Markets updated its outlook for GoDaddy Inc (NYSE: NYSE:GDDY), increasing the price target to $230 from the previous $190 while keeping the Outperform rating intact. The revision reflects the firm's confidence in GoDaddy's Airo platform, particularly after the recent annual investor dinner at the company's Arizona headquarters.
The stock has shown remarkable momentum, delivering a 92% return over the past year and currently trading near its 52-week high of $202.56. According to InvestingPro analysis, GoDaddy maintains a "GREAT" financial health score, though current valuations suggest the stock may be trading above its Fair Value.
The event highlighted the Airo platform's advanced AI web design features, with a focus on the newly introduced Airo Plus. This enhanced version promises broader functionality and direct monetization opportunities, and it is set to launch in the United States soon, following its initial release at the end of September.
Analysts noted an uptick in customer engagement with Airo since the last earnings report, and they see the Airo Plus for Managed WordPress as a significant opportunity for upselling. The company's revenue grew by 6.85% in the last twelve months, with InvestingPro data showing strong profitability metrics and 16 additional key insights available for subscribers.
The RBC Capital analyst cited the management's optimistic tone regarding the forthcoming marketing campaign for Airo Plus, now that it is market-ready. The firm believes that GoDaddy's AI-driven strategy has the potential to sustain higher growth rates in its Apps & Commerce segment, a prospect that remains underappreciated by the market.
In addition to the price target adjustment, RBC Capital made slight changes to their fiscal year 2024 estimates, which were deemed immaterial, attributing them to a prior modeling error. The new price target is based on a 23x enterprise value to estimated 2025 EBITDA multiple, a notable increase from the previous multiple of 19.6x used for the earlier price target. This is also compared to the industry's expected 20.6x EBITDA multiple for 2026.
In other recent news, GoDaddy Inc. has reported significant progress in its recent operations. The company has seen a 7% year-over-year increase in total revenue for the third quarter, reaching $1.15 billion. A notable portion of this success is attributed to the company's Applications & Commerce segment, which experienced a 16% growth in revenue.
In light of these developments, both JPMorgan (NYSE:JPM) and Baird have raised their price targets for GoDaddy, signaling confidence in the company's growth trajectory.
GoDaddy also introduced Airo Plus, a new premium service, and appointed Phontip Palitwanon as the new Chief Accounting Officer following a restructuring within the accounting department. The company's strategic initiatives, such as the use of artificial intelligence and bundling strategies, have reportedly resulted in customers adopting secondary products 25% quicker and potential operational expenditure savings.
Despite facing tougher comparisons for Applications & Commerce's annual recurring revenue in the future, GoDaddy plans to increase marketing investments for broader Airo launches and focus on pricing, bundling, and customer value enhancement.
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