DigitalOcean (NYSE:DOCN) Shares Gap Up After Strong Earnings

DigitalOcean Holdings, Inc. (NYSE:DOCN) shares gapped up prior to trading on Tuesday following a better than expected earnings announcement. The stock had previously closed at $37.17, but opened at $45.00. DigitalOcean shares last traded at $42.10, with a volume of 977,750 shares traded.

The company reported $0.49 earnings per share for the quarter, topping the consensus estimate of $0.34 by $0.15. The company had revenue of $204.90 million during the quarter, compared to analysts’ expectations of $200.54 million. DigitalOcean had a negative return on equity of 43.11% and a net margin of 10.86%. DigitalOcean’s revenue for the quarter was up 13.3% compared to the same quarter last year. During the same period in the prior year, the firm earned $0.44 earnings per share.

Analysts Set New Price Targets

DOCN has been the subject of a number of research analyst reports. Citigroup assumed coverage on DigitalOcean in a report on Friday, January 24th. They set a “buy” rating and a $45.00 price target for the company. Cantor Fitzgerald assumed coverage on DigitalOcean in a research report on Friday, January 17th. They issued a “neutral” rating and a $39.00 target price on the stock. JMP Securities increased their price objective on DigitalOcean from $47.00 to $55.00 and gave the stock a “market outperform” rating in a research report on Monday, January 27th. Morgan Stanley upgraded shares of DigitalOcean from an “equal weight” rating to an “overweight” rating and increased their target price for the stock from $40.00 to $41.00 in a research report on Thursday, January 16th. Finally, Needham & Company LLC restated a “hold” rating on shares of DigitalOcean in a research report on Tuesday, November 5th. Six investment analysts have rated the stock with a hold rating and five have issued a buy rating to the company. According to MarketBeat.com, the stock presently has a consensus rating of “Hold” and a consensus price target of $42.40.

Insider Activity at DigitalOcean

In other news, CFO Matt Steinfort sold 12,498 shares of the stock in a transaction dated Wednesday, December 4th. The shares were sold at an average price of $40.00, for a total value of $499,920.00. Following the completion of the sale, the chief financial officer now owns 517,498 shares in the company, valued at $20,699,920. This represents a 2.36 % decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is available at this hyperlink. Also, insider Bratin Saha sold 3,468 shares of the stock in a transaction dated Wednesday, December 18th. The shares were sold at an average price of $38.18, for a total transaction of $132,408.24. Following the completion of the sale, the insider now owns 379,795 shares of the company’s stock, valued at approximately $14,500,573.10. This trade represents a 0.90 % decrease in their position. The disclosure for this sale can be found here. Insiders sold 20,255 shares of company stock valued at $790,163 in the last three months. Corporate insiders own 0.74% of the company’s stock.

Hedge Funds Weigh In On DigitalOcean

A number of institutional investors and hedge funds have recently added to or reduced their stakes in DOCN. Versor Investments LP purchased a new stake in shares of DigitalOcean in the third quarter worth about $751,000. FORA Capital LLC purchased a new position in shares of DigitalOcean during the 3rd quarter valued at $1,149,000. Victory Capital Management Inc. grew its position in shares of DigitalOcean by 79.8% during the 3rd quarter. Victory Capital Management Inc. now owns 31,169 shares of the company’s stock valued at $1,259,000 after purchasing an additional 13,837 shares in the last quarter. Public Sector Pension Investment Board increased its holdings in shares of DigitalOcean by 13.5% in the third quarter. Public Sector Pension Investment Board now owns 134,214 shares of the company’s stock worth $5,421,000 after purchasing an additional 16,000 shares during the period. Finally, C2P Capital Advisory Group LLC d.b.a. Prosperity Capital Advisors bought a new stake in DigitalOcean during the fourth quarter valued at $5,382,000. Institutional investors own 49.77% of the company’s stock.

DigitalOcean Stock Performance

The stock has a market cap of $3.83 billion, a P/E ratio of 50.14, a P/E/G ratio of 3.12 and a beta of 1.81. The stock has a 50-day moving average price of $38.64 and a 200-day moving average price of $39.05.

About DigitalOcean

DigitalOcean Holdings, Inc, through its subsidiaries, operates a cloud computing platform in North America, Europe, Asia, and internationally. The company’s platform provides on-demand infrastructure and platform tools for developers, start-ups, and small and growing digital businesses. It also offers infrastructure-as-a-service (IaaS) solutions comprising compute and storage services, as well as networking projects, including Cloud Firewalls software, Managed Load Balancers software, and Virtual Private Cloud (VPC).