Key Stats for Doximity Stock
- Price Change for $DOCS stock: -9.6%
- Current Share Price: $65.61
- 52-Week High: $85.21
- $DOCS Stock Price Target: $70.11
What Happened?
Doximity (DOCS) stock dropped more than 9% after JPMorgan downgraded shares to “Underweight” from “Neutral”, citing valuation concerns and uncertainty around digital pharma advertising trends. The investment firm maintained its $62 price target on the medical professional networking platform.
JPMorgan acknowledged Doximity’s strong business fundamentals, including its dominant market position, which reaches over 80% of U.S. physicians and 60% of nurse practitioners and physician assistants.
The company also boasts robust relationships with top pharmaceutical manufacturers and hospitals, strong net revenue retention, and impressive profitability.
However, Doximity stock trades at 36x forward EV/EBITDA, well above the 23x median for comparable companies. While JPMorgan conceded Doximity’s financial profile warrants some premium, the current multiple seems stretched.
The DOCS stock downgrade also flagged limited visibility on digital pharma advertising budgets. More than 90% of Doximity’s revenue comes from marketing solutions for pharmaceutical and health system clients.
Hiring solutions account for roughly 5% of the total, with telehealth services making up the remainder.
This concentrated revenue mix poses a risk if pharma companies reduce their digital ad spending. JPMorgan cited potential headwinds to digital pharmaceutical advertising budgets and high competition as key concerns behind the downgrade.
The move comes despite Doximity posting strong first-quarter fiscal 2026 results. Revenue hit $146 million, up 15% year-over-year and beating the high end of guidance by 4%. Adjusted EBITDA margin reached 55% at $80 million, crushing estimates by 11%.
Free cash flow surged 52% year-over-year to $60 million. The company repurchased $122 million worth of shares at an average price of $53.99 during the quarter. Moreover, net revenue retention stood at 118% on a trailing twelve-month basis.
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What the Market Is Telling Us About Doximity Stock
The decline in Doximity stock reflects investor concerns about paying a premium valuation during a period of uncertainty. It has experienced 27 moves greater than 5% over the past year, indicating high volatility.
Doximity faces legitimate questions about sustaining growth as digital pharma budgets face scrutiny. It operates in an environment where policy uncertainty looms large. CEO Jeff Tangney acknowledged on the earnings call that more than half of U.S. physicians haven’t used any clinical AI yet, though many are interested.
That said, the company is making aggressive moves to expand its AI product suite. Doximity recently acquired Pathway, a 6-person Montreal startup specializing in AI clinical reference, for $26 million in cash plus up to $37 million in equity grants. Notably, Pathway’s AI scored a record 96% on the U.S. medical licensing exam.
Doximity also launched Doximity AI Scribe last week after beta testing with over 10,000 physicians. Over 75% of Scribe users return weekly. Tangney called AI Doximity’s “third act” after its newsfeed and workflow tools.
Management raised full-year revenue guidance to $628 million to $636 million, representing 11% growth at the midpoint. Adjusted EBITDA guidance also increased to $341 million to $349 million, indicating a 55% margin.
The guidance increase came from broad-based strength, including workflow modules, newsfeed growth, and surprisingly strong health system customer performance. Small and medium-sized pharma customers experienced a 100%+ year-over-year growth in bookings in Q1, thanks to Doximity’s client portal.
But management took a measured approach to the back half, given policy uncertainty. CFO Anna Bryson noted the company hasn’t seen any slowdown yet, but remains cautious about revenue not yet booked.
For investors weighing the JPMorgan downgrade, the key question is whether Doximity’s AI investments and market dominance justify the premium valuation.
The company generates enviable margins and cash flow. But at 36 times EV/EBITDA with limited visibility on core pharma advertising budgets, the risk-reward looks less compelling at current levels.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
