Top Rated Game Among Website Builders GoDaddy $ 110 Price Target: Jefferies

Jefferies said they agree that GoDaddy is a top game among website builders, with consistent execution and healthy cash flow generation after activist investor Starboard announced it had purchased a stake. 6.5% in a web services company worth about $ 800 million.

In its regulatory filing with the U.S. Securities and Exchange Commission, Starboard said the Arizona-based firm’s shares were undervalued and presented an attractive investment opportunity.

Following this, GoDaddy’s share climbed as high as 9.6% to an intraday high of $ 83.29 on Monday.

“We agree because our thesis is that GoDaddy (GDDY) is a top-notch game among website builders, with consistent execution and healthy cash flow generation. Even after today’s + 9% movement, the EV / FCF 2nd NTM 14.8x valuation is below 15.9x on average over 3 years and at a steep 3-year discount FCF CAGR 18%. Fiscal 22 looks set to benefit from the product innovation offered throughout FY 21, ”noted Brent Thill, equity analyst at Jefferies.

“We love GoDaddy (GDDY) for its consistent execution, double-digit organic revenue growth, strong uFCF generation, and attractive valuation (14.8 x EV / FCF 2e NTM vs. 18% CAGR up to in 23; the EV / S multiple is also a 3.6x CY23E and 4.1x NTM for a subscription model.). Our 12 month price target of $ 110 (unchanged) is based on EV / FCF 19x. “

GoDaddy Share Price Forecast

Eight analysts who came up with stock quotes for GoDaddy in the past three months predicted a 12-month average price of $ 95.63 with a high forecast of $ 112.00 and a low forecast of $ 81.00.

The target average price represents a change of 13.98% from the last price of $ 83.90. Of those eight analysts, five rated “Buy,” three rated “Hold” while none rated “Sell,” according to Tipranks.

Morgan Stanley gave the base target price of $ 81 with a high of $ 136 in a bullish scenario and $ 46 in a worst-case scenario. The company has given an “equal weight” rating to the actions of the Internet domain registrar and the web hosting company.

“GoDaddy is a market leader in under-penetrated SME Internet infrastructure. Market growth 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 SMEs and improving attachment rates are expected to lead to increased ARPU and retention rates to fuel revenue growth, ”said Elizabeth Elliott, Equity Analyst at Morgan Stanley.

“Consistent, large-scale growth and profitability gives us confidence in the cash flow growth estimates. We see a heavy acquisitions strategy limiting a reassessment to a mix of software and internet peers, as companies historically skewed by M&A are trading at an EV / S and EV / FCF discount to their peers. . “

Several other analysts have also updated their stock market outlook. Citigroup raised the price target to $ 110 from $ 105. 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 for now as the 50-200 Day MACD Oscillator and 100-200 Day MACD Oscillator signal a slight sell opportunity.

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Richard L. Militello