Piper Sandler analyst James Fish initiated coverage of DigitalOcean Holdings Inc. with an Overweight rating and a $72 price target (21 percent upside).
Fish expects DigitalOcean to benefit from the shift of the 18 percent public cloud workload annual growth in which cloud spending is only 23 percent of broader infrastructure spending today.
The analyst notes DigitalOcean is a price leader and provides best-in-class support.
However, Fish expects hyperscaler competitive concerns to persist and likely cap the multiple, with the company needing not to invest in more geo-availability but also more into the edge.
DigitalOcean’s Q4 FY21 revenue of $119.7 million, up 37 percent Y/Y, beat the consensus of $119.1 million. Non-GAAP EPS of $0.10 beat the consensus of $0.09.
DigitalOcean forecasts Q1 revenue of $126 million–$126.5 million compared to the consensus of $126.19 million and Non-GAAP EPS of $0.10–$0.12 versus the consensus of $0.11.
DigitalOcean sees FY22 revenue of $564 million–$568 million, above the consensus of $563.17 million, and Non-GAAP EPS of $0.70–$0.71, above the consensus of $0.58.
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