DigitalOcean (DOCN) Price Increase Not Simply Eaten By Inflation, EPS Increases Ahead - Oppenheimer

Oppenheimer analyst Timothy Horan reiterated an Outperform rating and $80.00 price target on DigitalOcean (NYSE: DOCN) after the company announced plans to increase prices effective 7/1.

The analyst stated "Droplet pricing offers will be hiked by 20%, which signals management's confidence in their position in the market, which we agree with. We think this is associated with 80% of their revenues. While some slight churn is expected, a new (less expensive) $4 offering will help very small customers. Larger customers will likely see rates increase 15%-20% over the next two years as contract renewals are negotiated. We raised FY22/FY23 estimates and reiterate our Outperform rating. In this inflationary environment, we expect companies with the best pricing power to outperform. They are using the money to improve service, but there is still a lot of leverage."

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

Shares of DigitalOcean closed at $36.45 yesterday.

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