Doximity upgraded at Morgan Stanley on expanding market for HCP platforms

 Doximity’s recent share price weakness looks out of step with a business that is seeing stronger engagement, rising ad demand and expanding use of its workflow tools, Morgan Stanley said as it upgraded the healthcare platform to Overweight.

Stock’s roughly 30% drop since early November has created an attractive entry point, particularly as Doximity’s guidance and consensus estimates remain conservative. Doximity shares are down about 18% year to date despite higher revenue and EBITDA estimates for calendar 2025.

Morgan Stanley raised its revenue growth forecasts for fiscal 2026 to 2028 and lifted its EBITDA estimates across the same period amid deeper integration of Doximity’s tools into clinicians’ daily routines. Brokerage also raised its price target to $65, about 45% upside.

Analysts said Doximity has moved beyond being a platform doctors check at the end of the day, as products such as Dialer, messaging, fax, email and AI tools including Doximity Scribe and DoxGPT are increasingly used throughout the workday.

Time spent on the platform is rising even as growth in daily active users moderates, which means there is higher engagement per user.

That engagement is translating into monetisation, Morgan Stanley said. Doximity remains a leading destination for pharmaceutical digital advertising targeted at healthcare professionals, benefiting from verified user data and strong targeting.

Ad agencies told the bank that HCP-focused digital ad budgets are growing 5% to 15% a year, with Doximity capturing a growing share as spending shifts away from TV and field sales.

Concerns around rising competition from OpenEvidence appear overdone, the analysts said. While OpenEvidence has introduced features similar to Doximity’s dialer, Morgan Stanley said there is limited evidence of disruption so far, and questions remain over how rivals can scale compliant pharma advertising.

The bank also highlighted Doximity’s balance sheet, with $878m in cash, no debt and an estimated $1bn in cumulative free cash flow through fiscal 2028, giving the company flexibility for buybacks and acquisitions.

https://m.uk.investing.com/news/stock-market-news/doximitys-underperformance-at-odds-with-improving-business-says-ms-4417608