DigitalOcean (NYSE:DOCN) was double-downgraded to Underperform from Buy at BofA on Friday, with a new price target of $25, down from $47 per share in a research note.
The analysts stated the company's fundamentals remain weak, and the transition of its CEO is concerning.
"Data from our analytics team suggests that traffic to the Digital Ocean domain has materially slowed down since the beginning of the year," they said. "We now expect customer growth, ARPU, and churn metrics to turn worse in the near term."
"Furthermore, on August 23rd, DOCN announced that the Board of Directors (BOD) has initiated a CEO search process, and current CEO Yancey Spruill will continue to serve until a successor is appointed, at which time he will step down from his role and as a member of the Board," they added.
With the fundamental slowdown and CEO transition creating headwinds in the trajectory of the business, the analysts also noted that the company's CFO has only been in the role since January 2023.