Wall Street: GoDaddy Still A Buy

Analysts kept GoDaddy Inc GDDY at Overweight after the company reported its 2Q results and issued guidance for FY15.

The company reported second quarter revenue of $394.5 million and adjusted EBITDA of $82.3 million. GoDaddy’s gross margin came in at 64.6 percent. The company guided to 3Q revenue of $405-$410mm and adjusted EBITDA of $82-$85mm, while announcing its full-year guidance for revenue of $1,595-$1,605mm and adjusted EBITDA of $328-$333mm.

Morgan Stanley: Bookings Beat Keeps Us Positive

In a report published Thursday, Morgan Stanley analyst Brian Essex maintained an Overweight rating on GoDaddy, while raising the price target from $29 to $30.

The company reported weaker-than-expected 3Q guidance. Essex pointed out, however, that bookings of $475.9mm, representing 16 percent y/y growth, were higher than the MS estimate of $463.3mm, representing 12.9 percent y/y growth.

“We see the 3Q and FY15 guidance as a conservative bar as we adjust our FY16 cash flow and price target slightly higher to account for better bookings,” Essex wrote. The adjusted EBITDA estimates for FY15 and FY16 have been raised from $324 million to $330 million and from $374 million to $396 million, respectively.

Barclays: Outperformance In The Right Places

In a report published Thursday, Barclays analyst Paul Vogel maintained an Overweight rating on GoDaddy, with a price target of $34.

GoDaddy reported results that were “broadly better than expectations,” analyst Paul Vogel said, while highlighting the outperformance of Business Applications. Revenue generated by Business Applications “grew the fastest of the three segments, and though small, we believe carries the highest gross margin.”

GoDaddy’s 3Q guidance was modestly short of consensus expectations. The company raised its FY15 EBITDA guidance, while keeping its revenue growth outlook unchanged, “which we view as conservative.”

The revenue and adjusted EBITDA estimates for 2016 have been raised from $1.83B to $1.83B and from $392M to $397M, respectively.

In the report Barclays noted, “In our view, this quarter’s results and guidance are a prime example of the investment points we outlined in our initiation – namely that low churn and ARPU growth among existing customers lead to high revenue visibility, and that growth from higher margin products is likely to lead to positive EBITDA revisions moving forward.”