Morgan Stanley believes that shares of Doximity look attractive after a recent sell-off. The bank upgraded the digital platform for medical professionals to an overweight rating from equal-weight. Its price forecast of $65, up from $62, implies upside ahead of 48%. Analyst Craig Hettenbach wrote that Doximity's 30% correction since its last earnings report on Nov. 6 provides investors with an attractive entry point. DOCS YTD mountain DOCS YTD chart "Underperformance in DOCS is at odds with our checks on the business and strengthening platform engagement," the analyst said. He noted that the stock currently trades at more than a 25% discount to its median post-COVID EV/EBITDA multiple. Hettenbach wrote that the company has successfully expanded the reach of its platform "into multiple workflow streams throughout a clinician's typical day," adding that traction has been intensified by the company's new product launches and acquisitions. "Doximity has consistently expanded a suite of tools, deepening its integration into clinicians' daily workflows, resulting in increased engagement and higher monetization," he said. The analyst added that a recent discussion with an ad agency suggested that while Doximity's growth of daily average users has moderated, the time spent on the platform has increased. The company remains the "clear leader" in pharma digital ads targeting health-care professionals, he said. "We see an expanding market for HCP-targeted marketing led by AI-enabled workflow tools and view concerns over competitive risks from OpenEvidence as overdone," Hettenbach wrote. The analyst also cited Doximity's robust free cash flow and strong balance sheet as additional tail winds. Shares of Doximity have slipped 18% on the year.
