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RBC Positive on GoDaddy's (GDDY) Move to Acquire Host Europe Group; Affirms at 'Outperform'

December 6, 2016 12:55 PM EST
Get Alerts GDDY Hot Sheet
Price: $122.08 --0%

Rating Summary:
    19 Buy, 9 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 7 | Down: 3 | New: 1
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RBC Capital affirms GoDaddy (NYSE: GDDY) at Outperform with a price target of $40 after the company announced plans to acquire Host Europe Group for around $1.8 billion.

The firm commented today:

  • Our Strategic View on the Deal: We view this deal both strategically and financially as positive. By acquiring HEG, GDDY will expand its international footprint (accelerating European timeline by 5+ years), increase its bookings ($236MM ex. PlusServer) and materially increase its customer base with a complementary business that has the same SMB focus that GDDY does. HEG currently has 1.7MM customers and GDDY believes there to be relatively little overlap between client bases. The deal also isn’t too surprising given that it had been widely reported on in the media for the past several weeks.
  • Reiterate Outperform: GDDY’s geographic expansion + product innovation playbook continues to work and catalysts remain, with opportunities for expansion into new segments for small businesses (such as marketing/communications) and into new geos (especially Asia). We continue to view GDDY as a leading Internet technology provider to small businesses, Web design professionals, and individuals. We believe that GoDaddy faces a very large, multi-billion-dollar TAM, including well over 300MM SMBs worldwide. It does it with a business model that has generated consistently robust double-digit revenue growth and improving margins – staying right with (or a bit above) the plan laid out at the time of the IPO. We also view the GDDY management team as particularly strong and experienced.

For an analyst ratings summary and ratings history on GoDaddy Inc click here. For more ratings news on GoDaddy Inc click here.



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