Spencer Platt/Getty Images News
Web hosting company GoDaddy (NYSE:GDDY) is still in the early stages of a significant evolution for the company, investment firm Baird said.
The research firm, which had three days of meetings with GoDaddy Chief Financial Officer Mark McCaffrey and its head of investor relations, said that The company appears well-positioned to increase revenue growth, increase margins and deploy capital intelligently.
“After hearing all the puts/takes, we have incremental confidence that the F24-26 ranges (at 20% CAGR+ FCF/share) are built on pragmatic assumptions that should be easily achievable,” analyst Vikram wrote Kesavabhotla in a note to investors. .
“Generally, GDDY is contemplating pre-Airo trends in terms of attack rates, margin factors with high visibility, and is allowing itself sufficient flexibility regarding buyback activity. Our sense is that there is still some skepticism of investors regarding each of these components, and positive execution against expectations, stocks should continue to move higher.”
Kesavabhotla maintained its Outperform rating on GoDaddy, reiterated it as its Best Idea, and raised its price target from $130 to $150.
The biggest opportunity appears to lie in Airo, GoDaddy’s generative AI solution to build the company’s online presence, Kesavabhotla. With Airo, Kesavabhotla believes GoDaddy will likely see higher connect rates for new customers, higher connect rates for existing customers, better monetization for premium features, the transition to value-based pricing, and an increase in partnerships.
“Early data/commentary all looks promising and none of this is reflected in the three-year outlook, leaving us optimistic that this could be a significant source of upside over time,” Kesavabhotla said.
GoDaddy shares fell by 0.3% Monday in midday trading.