Shares of Doximity, Inc. (DOCS) have increased 7% since the start of 2021. Doximity currently has over 1.5 million members across a variety of health systems. The cloud based digital platform has helped healthcare providers be more efficient with their patients. The healthcare sector is projected to grow annually around %15 in the next few years, leading investors to be obsessively curious on Doximity’s stock in the future.
In early of 2020, Doximity released Telehealth Solution, which delivers greater and more efficient levels of user engagement. The platform was released at an ideal time given the Covid-19 pandemic. The initial response was a very strong use in 2020 from its free customer base. A variety of analysts believe that the free customer base will eventually turn into paying customers in the next few years.
Adding Pharma’s customer base can drive revenue growth for Doximity and allow the company to expand. Currently, 2/3 of drug spending in the United States stems from pharmaceutical brands. Most of the top pharmaceutical manufacturers in the United States are customers of Doximity.
Needham reports that that they believe that Doximity’s opportunity could reach over $5.4B. Through its strong retention rate of 153% analysts believe that the company could continue to grow its customer base. Although access to the platform is free for medical professionals, the company is able monetize their platform through subscriptions to Dialer Pro, which are priced at $19.99.
Needham Analyst Alex Narum initiates coverage of Doximity and provides a Buy rating for the stock with a price target of $62. He believes that the stock will outperform the current market price of $54.35.
Doximity keeping their users and members engage is crucial to it’s success as competition increases and intensifies. Most physicians that are on the network are allowed to refer patients to other physicians internally within the network, leading to more efficient treatment sessions.
Needham mentions why they think the company has potential to grow rapidly, “We see DOCS as a well- positioned, early-stage company with roots in both of the fast growing SaaS and Digital Health sectors that enjoys best-in-class profitability for a vertical SaaS company. The pandemic created a great thirst for digital marketing solutions and an early Telehealth opportunity that we see as strong vectors to deliver upside to consensus growth expectations.”
Subscription-based revenue models are gaining more popularity and are preferred over the transactional or premise model. Most of Doximity’s revenue is stemming from their subscription model. This allows investors to view their company’s financials in the near future. As the digital health and Saas sectors continue to grow, Doximity will expand its services.
Most Wall Street analysts agree with Narum’s rating on the stock. Consensus on the street is that the stock is a Strong Buy based off 9 ratings, 7 which are buy ratings and 2 which are hold ratings. The average price target for the stock is $58.38, which indicates a 2.96% upside in the next twelve months.
