Why Wall Street is turning cautious on Doximity despite AI ambitions?
Investing.com -- Shares of Doximity came under renewed pressure after slew of Wall Street firms downgraded the healthcare technology company following a disappointing fiscal 2027 outlook and growing concerns over AI-related spending and slowing pharmaceutical advertising demand.
Baird downgraded Doximity to “Neutral” from “Outperform” and slashed its price target to $18 from $40, noting that the company faces a “very long road ahead” before its AI investments generate meaningful returns. Analysts cited increasing competition, softer demand trends, leadership changes, and continued pressure on investor sentiment.
The brokerage said Doximity’s fiscal first-quarter and full-year guidance both fell below Wall Street expectations. The company forecast fiscal 2027 revenue of $664 million to $676 million, well below consensus estimates near $697 million, while adjusted EBITDA guidance of $323 million to $335 million also trailed expectations.
Despite reporting fiscal fourth-quarter revenue of $145.4 million and adjusted EBITDA of $65.8 million slightly above consensus estimates, analysts remained cautious about the company’s growth trajectory.
Meanwhile, KeyBanc downgraded the stock to “Sector Weight” from “Overweight,” pointing to limited near-term catalysts and worsening visibility into pharmaceutical marketing budgets. The firm said drugmakers are increasingly seeking lower-cost and AI-driven advertising solutions, limiting Doximity’s ability to gain market share this year.
KeyBanc also warned that macroeconomic uncertainty and healthcare policy concerns continue to weigh on digital pharma advertising spending, with market growth expected to remain at or below 5% this year — below historical averages.
The analysts noted that Doximity’s newly launched AI Search product missed the key upfront selling season and is unlikely to contribute meaningful revenue until the second half of fiscal 2027, although the company has already signed initial deals with major pharmaceutical manufacturers.
Both firms highlighted rising AI-related investments as another pressure point. Doximity expects increased spending on AI infrastructure, engineering hires, peer-review tools, and brand marketing to compress margins in fiscal 2027.