What Happened?
Shares of medical professional network Doximity (NYSE: DOCS) fell 3.2% in the afternoon session after Goldman Sachs downgraded the stock to Sell from a Neutral rating. The investment bank cited concerns over the company's high valuation and slowing growth, which it believes create an unfavorable risk/reward scenario for investors. Goldman Sachs set a price target of $64 for the stock.
The shares closed the day at $70.62, down 3.5% from previous close.
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What Is The Market Telling Us
Doximity’s shares are very volatile and have had 27 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock gained 48.2% on the news that the company reported impressive third-quarter earnings, which blew past analysts' revenue, EPS, and EBITDA expectations.
Sales improved significantly, driven by robust platform engagement, particularly in new products like AI-powered workflow tools and the expanded client portal. The improved engagement facilitated upselling among top pharma clients. The company recorded an impressive 56% adjusted EBITDA margin, highlighting disciplined cost management, which was supported by higher incremental margins from digital products. The business is observing stabilization in key markets, including strong growth in pharma budgets and increased adoption of digital solutions. Guidance was also strong as the company lifted its full-year sales outlook, while the EBITDA forecast came in ahead of consensus. Zooming out, we think this was a strong quarter for the company. Following the result, Keybanc analyst Scott Schoenhaus upgraded the stock's rating from Neutral to Buy on hopes for momentum to improve heading into the last quarter of the year.
Doximity is up 31.9% since the beginning of the year, but at $70.64 per share, it is still trading 15% below its 52-week high of $83.14 from February 2025. Investors who bought $1,000 worth of Doximity’s shares at the IPO in June 2021 would now be looking at an investment worth $1,333.
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