GoDaddy Has Developed The Beginnings Of A Competitive 'Moat'

Summit Redstone’s Jonathan Kees believes that with an addressable market of over $10 billion in the US, Godaddy Inc GDDY has strong competitive advantages that should enable the company to gain market share and grow to be a leader.

Kees initiated coverage of the company with a Buy rating and price target of $41.

Competitive Advantages

The analyst believes GoDaddy’s advantages include “a well-known brand, large customer base, and significant scale, which together with targeted marketing, in-language build-out’s, and product add-on’s, should facilitate a more successful expansion overseas and growth of Average Revenue Per User (ARPU).”

Kees also believes the company’s financial guidance and targets for revenue growth for 2016 and long-term adjusted EBITDA margin in the mid-20 percent are achievable, especially given that GoDaddy’s main competitors seem preoccupied with making acquisitions, rather than being focused on the market.

Market Share Gain

This presents an opportunity for the company to gain market share. In fact, GoDaddy has been investing in its platform, technology and brand, which has allowed the company the flexibility to decrease opex whenever needed to meet its margin goals.

Kees also believes that the company has made progress in its “plans to increase sales to web professionals and to expand overseas,” and added, “With international growth, GDDY can increase its global market presence and lessen any weakness impact from any one market.”