GoDaddy's stock fell about 2 percent Tuesday after Citi analysts downgraded the stock, citing its valuation.
Citi lowered its GoDaddy rating to "neutral" from "buy, noting that the stock was trading within 4 percent of $34, "a level which it has been unable to hold in previous trading."
"Our 10-year [discounted cash flow] analysis, which assumes roughly 100bps of margin expansion per [year] and 1mn+ net customer additions through 2021, yields a $35 price target," they said in Tuesday note to clients.
"Considering these assumptions are in-line with the margin expansion (140bp) and customer growth (+1.1mn) seen in 2015, we see limited upside on a fundamental basis from current levels. Lastly, shares now trade at 13.2x our 2017 EBITDA estimate, a premium to GDDY's comp group," they said.
GoDaddy shares are virtually flat for the year, but have advanced more than 12 percent over the past 12 months.
GDDY 12-month chart
Disclosure: Citi has received compensation from GoDaddy for investment banking services.