DigitalOcean Receives “Outperform” Rating From William Blair, Despite Q1 Results Miss.
New York-based tech firm DigitalOcean Holdings, Inc. (NASDAQ:DOCN) has been given an “outperform” rating by investment analysts at William Blair in a research note issued to investors on Tuesday, May 13th, according to reports from PriceTargets.com.
The ratings come despite DigitalOcean’s disappointing Q1 results, which were announced just days prior. The earnings figures missed analysts’ consensus estimates of $0.29 EPS by ($0.01), with the company reporting $0.28 EPS for the quarter instead. Additionally, DigitalOcean had a negative net margin of 4.21% and a negative return on equity of 2.36% during Q1.
Despite these setbacks, William Blair issued optimistic estimates for the company’s earnings up to FY2024, projecting $0.11 EPS for Q2 2023, $0.16 EPS for Q3 2023, and $0.21 EPS for Q4 2023. Further projections place FY2023 earnings at $0.48 EPS and FY2024 earnings at $0.59 EPS respectively.
As a leading cloud computing platform provider with operations in North America, Europe ,Asia and beyond, DigitalOcean enables developers to extend native capabilities via its wide range of managed application tools while offering flexible infrastructure solutions that cater to startups as well as small and medium-sized businesses.
Although the company faces growing competition within the industry from fellow cloud giants such as AWS or Google Cloud Platform it appears that it still has solid growth prospects ahead as we head into an increasingly digitized economy with surging demand expected from enterprises seeking to build scalable applications quickly & efficiently without dealing with complex infrastructure management themselves.
Overall sentiment around Digital Ocean appears bullish based on these ratings updates however there are risks associated with investing in a rapidly changing technology market which is why potential investors should weigh up the risks and potential rewards exposed to them before making their next move.
DigitalOcean Holdings: A Look at Ratings, Stock Performance, and Insider Transactions
DigitalOcean Holdings, a cloud computing platform, has been the topic of multiple reports, with various ratings and target prices from different equity research analysts. Credit Suisse Group raised DigitalOcean’s price target from $31.00 to $34.00 and gave it a “neutral” rating in a research report on February 17th, while Oppenheimer downgraded the stock from an “outperform” rating to a “market perform” rating and set a price target of $40.00 on March 17th. Two equities research analysts have rated the stock with a sell rating, five have issued a hold rating, while five have given it a buy rating. As per data obtained from Bloomberg.com, DigitalOcean currently has an average rating of “Hold” and an average target price of $38.67.
Shares of DOCN began trading at $32.28 on May 13, 2023. The company has a market capitalization of $2.87 billion, with a P/E ratio of -75.07 and a beta of 1.21. Its current ratio is 5..76 while its quick ratio is also the same figure; similarly, its debit-to-equity ratio stands at 28.78%. Its fifty-day simple moving average is at $34.57 while its two-hundred-day simple moving average rests at $31.27,. Notably, DOCN hit its twelve-month high in the last financial year at $53,.88m but had its lowest point at $23,.38m in the same period.
The company operates through subsidiaries across North America, Europe, Asia, and other international markets providing on-demand infrastructure and platform tools for developers as well as small-to-medium-sized businesses via their cloud computing technology offering solutions across compute, storage & networkings services under fully maintained applications including containers and database solutions.
In related news that was disclosed via the Securities & Exchange Commission, General Counsel Alan Shapiro sold 39,358 shares of the company’s stock on February 21st for an average price of $34.59, totaling a sum of $1,361,393.22. Following this sale, Shapiro now directly owns 227,349 shares in the firm currently valued at $7,864,001.91. On April 10th of the same year, COO Jeffrey Scott Guy offloaded some DOCN shares for $219,720 resulting from around 6k DOCN units sold at an average price of $36.62 per share.
Institutional investors have also been making changes to their positions in DigitalOcean with several altering their stakes recently. Baird Financial Group appropriated additional DigitalOcean shares worth approximately $1.4m during the fourth quarter (Q3), while Assetmark bought more DOCN units for about $59k in Q1 this year compared to Vident Investment Advisory’s purchases of additional DOCN shares worth roughly $230k during Q4 last year. Nisa Investment Advisors likewise spiked its holdings by over 28%, amounting to roughly 1,.997 shares after acquiring more than 447 units while Signaturefd LLC increased its stake by over half or approximately 64% leading towards owning closing to about 1,.290 DigitalOcean shares.
DigitalOcean continues to make strides across various global markets with its cloud computing solution capable of providing on-demand infrastructure and platform tools for developers and small-to-medium-sized businesses alike. Despite selling activities recorded among insiders as noted in SEC filings on DOCN transactions performed earlier this year that triggered alarm among certain investors; yet irrespective of those events discussed- DigitalOcean remains one to watch closely amongst growth stocks that could do well in the future across varied business verticals they operate in globally based on available market data.