DigitalOcean initiated with a Buy at Needham

Needham analyst Mike Cikos initiated coverage of DigitalOcean with a Buy rating and $36 price target. The analyst expects the company’s consumption-based model and initiatives to land larger customers and better mine the market opportunity through managed services offerings to "speed up" its revenue growth over the medium-term. Furthermore, DigitalOcean’s expectations for 30%-plus revenue growth and a 20% free cash flow margin in 2024 "fit the bill" for investor expectations in the current environment, Cikos tells investors in a research note. He believes management can execute against its 2023 preliminary guidance.