Movement Alert|DigitalOcean Holdings, Inc. Falls 5.08% in Regular Trading, UBS Target Price Cut Compounds Year-over-Year Earnings Decline

Market Focus
Aug 12

On August 12, DigitalOcean Holdings, Inc. fell 5.08% in regular trading, trading at $123.19/share, with turnover of $162 million. The decline was triggered by UBS lowering its price target from $155 to $140 while maintaining a neutral rating, compounding concerns over year-over-year earnings deterioration.

The company reported Q2 adjusted EPS of $0.45, beating the consensus estimate of $0.26 by 73%, but representing a 23.73% decline from $0.59 per share a year earlier. Revenue of $281.18 million grew approximately 29% year-over-year, exceeding estimates of $279.19 million. The company also raised full-year Non-GAAP EPS guidance to $1.35-$1.40, well above the FactSet estimate of $1.24. Despite the strong beat, the year-over-year profit contraction raised questions about earnings quality. The stock had previously rallied on the results and is now giving back a portion of those gains. Analysts polled by FactSet maintain an average target price of $177.20 with an overall overweight rating.

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