GDDY: Mixed Outlook Will Shape Balance Between AI Progress And Earnings Efficiency

Analysts have trimmed their price target on GoDaddy to approximately $134 from $150, citing slightly slower expected revenue growth and a modestly higher discount rate, while also highlighting resilient bookings, solid Q3 beats, and a stronger long term margin profile.

Analyst Commentary

Bearish analysts have recently cut their price targets on GoDaddy, pointing to a combination of mixed near term guidance and reduced confidence in the durability of elevated growth trends. While fundamentals are seen as generally ahead of prior expectations, these target reductions underscore a more cautious stance on how much upside remains in the shares at current valuation levels.

Commentary around applications and commerce performance has been nuanced, with stronger than expected Q3 bookings and solid beats on revenue, NEBITDA, and free cash flow, but also signals that growth may moderate as the company laps tougher comparisons. This has prompted some on the Street to seek clearer visibility into the medium term trajectory for both top line expansion and margins before assigning more aggressive valuation multiples.

Bearish Takeaways

• Bearish analysts argue that the recent price target cuts reflect rising uncertainty around the sustainability of mid teens growth, particularly as applications and commerce revenue guidance for Q4 points to a step down versus recent trends.
• There is concern that valuation already embeds a robust execution scenario, leaving less room for error if growth slows or margin expansion does not materialize as quickly as current frameworks imply.
• Mixed Q4 guidance, with EBITDA roughly in line but revenue only slightly ahead of consensus, is seen as limiting near term positive catalysts and increasing the risk of expectation resets.
• Some bearish voices highlight the need for improved visibility into the mid term growth and margin profile, suggesting that without clearer confirmation, upside to the stock could remain constrained despite strong recent results.

What's in the News

• GoDaddy expanded its Airo.ai platform with six new specialized AI agents to streamline marketing, customer communications, appointments, domain setup, security, and expert support for small businesses (Key Developments).
• The company launched Airo.ai, a beta agentic AI experience that turns conversational instructions from small business owners into completed tasks across domains, websites, branding, compliance, and apps (Key Developments).
• GoDaddy reported major progress on its Agent Name Service, opening public access to the ANS API and publishing open standards to bring trusted, verifiable identity to AI agents at internet scale (Key Developments).
• Revenue guidance for full year 2025 was raised to about 8 percent growth, with a new range of $4.93 billion to $4.95 billion, putting the outlook at the top end of GoDaddy's three year target range (Key Developments).
• GoDaddy continued returning capital to shareholders, completing the repurchase of roughly 3.34 percent of shares outstanding for $767.27 million under its latest buyback program (Key Developments).

Valuation Changes

• The consensus analyst price target has been reduced meaningfully to approximately $134 from $150, reflecting a more conservative view on upside potential.
• The discount rate has risen slightly to about 9.68 percent from 9.41 percent, modestly increasing the required return embedded in the valuation model.
• Revenue growth assumptions have been trimmed to roughly 6.41 percent from 7.25 percent, indicating expectations for somewhat slower top line expansion.
• The net profit margin outlook has improved slightly to about 19.05 percent from 18.37 percent, signaling a more favorable long term earnings efficiency profile.
• The future P/E multiple has fallen significantly to around 18.7x from 24.1x, implying a lower valuation being assigned to projected earnings.