Khanchit Khirisutchalual
Raymond James resumed coverage of several small and medium-sized businesses, including GoDaddy (New York Stock Exchange: GDDY), Squarespace (SQSP) and Wix.com (WIX), in the internet space, citing the benefits of generative disruption from ai.
A team of analysts led by Josh Beck said the Internet space for SMBs has been flagged as a group exposed to GenAI disruption due to early consumer/prosumer use cases of text/image generation, which they believe has limited many to some extent.
“However, as part of our SMB GenAI Underdog thesis, we actually believe that ai creates a net opportunity for web tool platforms to incorporate GenAI technologies that should reduce the burden of creating a web/business presence and structurally improve curves. of adoption,” he said. Beck and his team in a research note.
Analysts believe GenAI creates an opportunity for these platforms to offer types of digital labor agents to effectively help SMBs with limited workforces (often sole proprietors or perhaps a handful of employees) add workforce-facing capabilities. customer, such as rich-based support/sales. customer data sets, as well as delivering potential cost efficiency gains not included in long-term margin goals to better serve customers, which typically number in the millions.
GoDaddy (GDDY): Raymond James resumed coverage of GoDaddy with a Strong Buy rating and assigned a $150 price target.
Analysts said their “SMB GenAI Tailwind” thesis relies on GoDaddy using the innovative Airo GenAI stack to effectively reduce product adoption hurdles beyond core domains such as logo creation, presence, commerce/gross payments volume or GPV, which should lead to an increasing mix of two additional product customers.
Over time, analysts said, they believe GoDaddy could effectively “outsource” customer service expertise and a deep data set to produce a more autonomous SMB agent to help respond to customer requests and generate a significantly autonomous software as a service, or SaaS.
Square Space (SQSP): The company resumed coverage of Squarespace with an Outperform rating and set a $40 price target on the stock. Beck and his team expect Squarespace's payment acceptance to exceed expectations and create a tailwind for multi-year growth.
Wix.com (WIX): Analysts resumed coverage on Wix with an Outperform rating and a $160 price target. They see a multi-year tailwind forming following the launch of Wix Studio (over 500,000 accounts in about six months) to drive a greater mix of agencies and developers.
LegalZoom.com (LS): Analysts resumed coverage on LegalZoom on Market Perform, noting that their optimism about the management team's strategy to leverage its unique early funnel signals to sell financial products is tempered by uneven macro formation and limited reserve visibility subscription.
ZipRecruiter (ZIP): For ZipRecruiter, analysts resumed coverage at Market Perform as their belief in the pivot-up strategy contrasts with an uneven labor market that they expect will continue to be exposed to “high retention” (employees tend to stay), employees dynamic.
Yelp (YLP): Raymond James began appearing on Yelp with a market perform rating as its support for the home services strategy is offset by broader weakness in restaurant spending and a lack of visibility in motor marketing search (although analysts like the boost to effectively capture more traffic). property) returns on spending.
GoDaddy (GDDY) has a Buy rating on Seeking Alpha's Quant Rating system, consistently outperforming the market. Meanwhile, the average rating of Seeking Alpha authors is also Buy and so is the average rating of Wall Street analysts, Buy.