Citi reiterates Buy rating on GoDaddy stock with $234 price target

GoDaddy (GDDY) reported strong Q1 2025 results, exceeding EPS and revenue forecasts with 8% year-over-year revenue growth and a 26% increase in free cash flow. Citi reiterated its Buy rating with a $234 price target, viewing current market concerns about customer metrics as an opportunity, citing potential margin outperformance and easing comparisons in H2 2025. This positive outlook is echoed by other firms like JPMorgan and Benchmark, which have maintained or raised price targets, emphasizing GoDaddy's robust free cash flow, strategic focus on AI, and long-term growth trajectory.

Analysis

GoDaddy Inc. (GDDY) demonstrated strong operational execution in its first quarter of 2025, reporting an earnings per share of $1.51 and revenue of $1.2 billion, which surpassed analyst forecasts of $1.38 and $1.19 billion, respectively. This 8% year-over-year revenue growth was complemented by a significant 26% increase in free cash flow to $411 million, a key metric supporting bullish analyst theses. Despite a stable customer count of 20.5 million and market concerns over booking metrics, firms like Citi view the situation as an investment opportunity, reiterating a "Buy" rating with a $234 price target. The positive outlook is predicated on GoDaddy's strategic focus on higher-intent customers, continued momentum in its Applications & Commerce segment, and margin expansion driven by the implementation of generative AI in customer care. This sentiment is largely shared across Wall Street, with JPMorgan and Benchmark setting price targets of $240 and $250, respectively, citing confidence in the company's AI-driven product innovation. Citi’s valuation case hinges on a potential re-rating of the stock's price-to-free-cash-flow multiple from the current 13x to a target of 16x, supported by anticipated cost benefits and easing growth comparisons in the latter half of 2025.

Key Decisions for Investors

• Given the strong free cash flow growth of 26% and consistent earnings beats, investors may view the current valuation as an attractive entry point, particularly as the price-to-FCF multiple of 13x sits below analyst targets of 16x.
• Investors should closely monitor upcoming quarterly reports for any acceleration in customer growth and Applications & Commerce bookings, as these are the primary metrics causing current market apprehension and could invalidate the bullish thesis.
• Pay close attention to management commentary on the adoption and monetization of the Airo AI assistant and progress on cost savings from AI implementation, as these are key potential catalysts for future margin expansion and stock re-rating.