DigitalOcean (NYSE:DOCN) Stock Jumps 6.9% - Still a Buy?

Key Points

• DigitalOcean shares rose 6.9% to about $99.63 in mid-day trading, although volume was 92% below the average session volume.
• Analysts are broadly bullish: the stock has a consensus “Buy” rating and a $150.69 average price target, with recent upgrades from Zacks, Stifel Nicolaus, and Piper Sandler.
• The company reported quarterly EPS of $0.45 versus $0.26 expected, while revenue increased 28.6% year over year to $281.18 million; however, insiders sold 22,641 shares worth $2.59 million over the past 90 days.

DigitalOcean Holdings, Inc. (NYSE:DOCN - Get Free Report)'s share price rose 6.9% during mid-day trading on Monday. The stock traded as high as $97.72 and last traded at $99.63. Approximately 265,610 shares traded hands during mid-day trading, a decline of 92% from the average session volume of 3,506,142 shares. The stock had previously closed at $93.22.

Wall Street Analyst Weigh In

DOCN has been the topic of several research analyst reports. Zacks Research upgraded shares of DigitalOcean from a "hold" rating to a "strong-buy" rating in a research note on Monday, October 19th. Stifel Nicolaus raised shares of DigitalOcean from a "hold" rating to a "buy" rating and raised their price objective for the stock from $135.00 to $160.00 in a report on Tuesday, July 21st. UBS Group reiterated a "neutral" rating and set a $105.00 target price on shares of DigitalOcean in a research report on Monday. Piper Sandler raised DigitalOcean from a "neutral" rating to an "overweight" rating and dropped their price objective for the stock from $142.00 to $126.00 in a report on Wednesday, October 21st. Finally, Barclays boosted their target price on DigitalOcean from $160.00 to $161.00 and gave the stock an "overweight" rating in a research report on Wednesday, August 5th. Two investment analysts have rated the stock with a Strong Buy rating, fourteen have given a Buy rating and two have given a Hold rating to the company. According to MarketBeat, the stock presently has a consensus rating of "Buy" and a consensus price target of $150.69.

DigitalOcean Stock Performance

The company has a debt-to-equity ratio of 1.14, a current ratio of 1.31 and a quick ratio of 1.31. The stock has a 50-day simple moving average of $121.84 and a 200-day simple moving average of $130.46. The stock has a market cap of $10.59 billion, a P/E ratio of 46.16, a PEG ratio of 81.27 and a beta of 1.70.

DigitalOcean (NYSE:DOCN - Get Free Report) last posted its quarterly earnings results on Tuesday, August 4th. The company reported $0.45 EPS for the quarter, topping analysts' consensus estimates of $0.26 by $0.19. The business had revenue of $281.18 million during the quarter, compared to analysts' expectations of $279.03 million. DigitalOcean had a net margin of 23.26% and a return on equity of 31.01%. The business's quarterly revenue was up 28.6% on a year-over-year basis. During the same period last year, the company posted $0.39 earnings per share. DigitalOcean has set its FY 2026 guidance at 1.350-1.400 EPS and its Q3 2026 guidance at 0.280-0.300 EPS. Research analysts forecast that DigitalOcean Holdings, Inc. will post 0.62 earnings per share for the current year.

Insider Activity

In other news, Director Warren Adelman sold 4,200 shares of DigitalOcean stock in a transaction on Friday, August 7th. The shares were sold at an average price of $124.01, for a total transaction of $520,842.00. Following the completion of the sale, the director directly owned 67,433 shares of the company's stock, valued at approximately $8,362,366.33. The trade was a 5.86% decrease in their position. The transaction was disclosed in a legal filing with the SEC, which is accessible through this link. Also, CFO Matt Steinfort sold 10,000 shares of DigitalOcean stock in a transaction that occurred on Thursday, September 3rd. The stock was sold at an average price of $105.73, for a total transaction of $1,057,300.00. Following the transaction, the chief financial officer directly owned 503,692 shares in the company, valued at $53,255,355.16. This trade represents a 1.95% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders have sold a total of 22,641 shares of company stock worth $2,589,317 over the last ninety days. Company insiders own 0.96% of the company's stock.

Institutional Investors Weigh In On DigitalOcean

Hedge funds have recently added to or reduced their stakes in the stock. Parallel Advisors LLC raised its position in shares of DigitalOcean by 66.2% during the 1st quarter. Parallel Advisors LLC now owns 324 shares of the company's stock valued at $28,000 after purchasing an additional 129 shares during the period. Root Financial Partners LLC bought a new stake in DigitalOcean in the third quarter worth about $31,000. Banque Cantonale Vaudoise bought a new position in shares of DigitalOcean in the first quarter worth about $33,000. Optiver Holding B.V. lifted its stake in DigitalOcean by 1,063.9% in the first quarter. Optiver Holding B.V. now owns 419 shares of the company's stock worth $36,000 after acquiring an additional 383 shares during the period. Finally, SSI Investment Management LLC bought a new position in shares of DigitalOcean in the 2nd quarter worth $37,000. 49.77% of the stock is currently owned by hedge funds and other institutional investors.

About DigitalOcean

DigitalOcean Holdings, Inc is a cloud computing company that provides infrastructure and developer-focused services for startups, small and medium-sized businesses, and individual developers. Its platform is designed to simplify the deployment, management, and scaling of applications without requiring customers to build and operate extensive in-house infrastructure.

The company's offerings include Droplets, its virtual machine service; managed Kubernetes; managed databases; object and block storage; networking tools; and application deployment services through App Platform.

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