DigitalOcean price target raised to $100 from $85 at Oppenheimer

Oppenheimer analyst Param Singh raised the firm’s price target on DigitalOcean (DOCN) to $100 from $85 and keeps an Outperform rating on the shares after conducting a multi-stage DCF analysis, which better frames the investor argument of CapEx versus future growth. Behind this DCF analysis and the firm’s incrementally bullish stance is the expanding TAM opportunity for AI inferencing; strong customer response to DigitalOcean’s offerings and competitive positioning against large hyperscalers/cloud vendors, as well as other neo-clouds; and ability to deliver sustainable high free cash flow margin upon reaching maturity. Oppenheimer believes the Street is too conservative in its long-term growth expectations for the company, as well as the return on CapEx investments.