Doximity stock falls as Freedom Capital cuts to hold By Investing.com

Investing.com -- Doximity Inc (NYSE:DOCS) shares fell 5.6% on Tuesday after Freedom Capital downgraded the stock from Buy to Hold, despite raising its price target to $27 from $24. The downgrade followed the company's fiscal first quarter results that exceeded Wall Street estimates. Management increased its full-year revenue guidance but lowered its EBITDA outlook to fund higher AI usage. Freedom Capital analyst Gene Mannheimer noted that while the first quarter revenue performance was strong compared to the fourth quarter, with AI Search contracts showing early traction and pharma budgets potentially stabilizing, the company is making another step-up in AI compute and product investment. The firm's fiscal 2027 EBITDA guidance was reduced to $319 million at the midpoint from $329 million, even as the revenue outlook was boosted by 1%. Mannheimer commented that the quarter validates the revenue side of the AI thesis, but at the expense of margins. The analyst said the risk/reward now looks balanced, leading to the Hold rating. He added that the firm believes the market is weighing the early strength in AI search against what appears to be softening of the core business, which Freedom Capital attributes to competition from Epic and OpenEvidence. The analyst maintained that pharma spend remains tight, though budgets may be stabilizing. The company's AI Search contracts are demonstrating good early traction, according to the analyst's assessment. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.