William Blair analyst Jason Ader has maintained their bullish stance on DOCN stock, giving a Buy rating on February 20.
Jason Ader has given his Buy rating due to a combination of factors including DigitalOcean’s strong fourth-quarter performance and optimistic guidance for the future. The company reported a revenue growth of 13%, surpassing consensus expectations, and a non-GAAP EPS that exceeded estimates by $0.15, reflecting a 13% year-over-year increase. Despite macroeconomic challenges, DigitalOcean demonstrated robust performance in its core business, driven by new customer activity and an increase in net dollar retention.
Furthermore, the company’s focus on high-spending customer cohorts and the growing demand for its AI/ML offerings, such as GPU-as-a-service and the GenAI platform, contributed to its positive outlook. The guidance for the first quarter and the full year also came in above expectations, with revenue growth anticipated in the low- to mid-teens. Although adjusted EBITDA guidance was slightly below consensus, the company has room for investment acceleration if needed, supported by a healthy free cash flow margin. These factors collectively underpin Ader’s confidence in DigitalOcean’s potential, leading to the Buy rating.
Ader covers the Technology sector, focusing on stocks such as CommVault Systems, Dropbox, and DigitalOcean Holdings. According to TipRanks, Ader has an average return of 4.7% and a 51.79% success rate on recommended stocks.
In another report released on February 20, Citi also reiterated a Buy rating on the stock with a $45.00 price target.