Canaccord Genuity analyst Kingsley Crane maintained a Buy rating on DigitalOcean Holdings (DOCN – Research Report) yesterday and set a price target of $45.00.
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Kingsley Crane has given his Buy rating due to a combination of factors that highlight DigitalOcean Holdings’ potential for growth and strategic positioning in the market. The company has demonstrated significant progress with its AI-related annual recurring revenue growing by 160% and a net revenue retention rate increasing to 100%. Additionally, DigitalOcean has achieved competitive migration wins from larger hyperscale providers, indicating its ability to capture market share.
Furthermore, the company’s strategic capital investment approach, particularly its GPU deployment strategy following the acquisition of Paperspace, shows a balanced focus on AI growth and higher-value services. This approach, coupled with the introduction of leasing arrangements to support customer demand, positions DigitalOcean well for future expansion. Despite a temporary decline in free cash flow margin due to front-loaded capital expenditure, the company remains on track with its growth targets, aiming for 18-20% growth by 2027. These factors, combined with the stock’s attractive valuation, underpin Crane’s Buy rating and a price target of $45.
Crane covers the Technology sector, focusing on stocks such as DigitalOcean Holdings, BlackBerry, and CyberArk Software. According to TipRanks, Crane has an average return of 0.0% and a 41.94% success rate on recommended stocks.
In another report released yesterday, Citizens JMP also reiterated a Buy rating on the stock with a $55.00 price target.