GoDaddy To Gain 'Outsized' Benefits From AI Tools: Analyst

RBC Capital Markets analyst Brad Erickson upgraded GoDaddy Inc GDDY to Outperform from Sector Perform rating at an increased price target of $124 from $90.

The analyst says that GDDY is an under-owned, durably growing cash machine with a dash of AI. 

Although the 2023 web design industry top-of-funnel trends have somewhat underperformed expectations due to continued churn post-COVID, the analyst sees GDDY's uniquely hedged customer acquisition channel as a tailwind and expects it to gain outsized benefits as AI tools reduce customer acquisition friction.

The analyst expects workload migration/ unification to drive cost synergies, and says the heavy multi-year product development investments can be tied to revenue growth.

Also, the analyst estimates revenue and adjusted EBITDA of $4.255 billion and $1.124 billion for FY23 and $4.61 billion and $1.377 billion for FY24.

Also Read: GoDaddy's Strong Foundation Pleases Analyst, But Shaky Execution Raises Concern

Earlier this month, GDDY reported better-than-expected Q3 FY23 results, with revenue of $1.070 billion beating the consensus of $1.065 billion and EPS of $0.89, surpassing the estimate of $0.72.

Price Action: GDDY shares are trading higher by 2.85% at $95.51 on the last check Wednesday.