What Happened?
Shares of medical professional network Doximity (NYSE: DOCS) fell 6.7% in the morning session after JP Morgan downgraded the stock to 'Underweight' from 'Neutral', citing concerns about its high valuation and uncertainty in advertising trends.
The bank noted that there was limited visibility on digital pharma advertising. Furthermore, JPMorgan pointed out that Doximity traded at a steep premium compared to its peers. While acknowledging that the company's financial profile warranted some premium, the firm highlighted that its enterprise value was 36 times a future earnings measure (EBITDA), well above the 23 times median for similar companies. The brokerage maintained its price target of $62 on the shares.
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What Is The Market Telling Us
Doximity’s shares are very volatile and have had 27 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 3.2% as confidence in the artificial intelligence market was renewed, pushing both the S&P 500 and Nasdaq to new all-time intraday highs. The rebound was led by chipmaker Nvidia, whose shares rose nearly 2% after its CEO confirmed that demand for computing has "gone up substantially" in recent months. These comments helped reassure the market that the AI boom is supported by genuine demand, calming fears that were sparked a day earlier by a report questioning the profitability of Oracle's cloud business. The rally was strong enough to put the information technology sector on pace for a fresh closing high. This upward momentum occurred despite potential headwinds from an ongoing U.S. government shutdown, which entered its second week.
Doximity is up 26% since the beginning of the year, but at $67.46 per share, it is still trading 18.9% below its 52-week high of $83.14 from February 2025. Investors who bought $1,000 worth of Doximity’s shares at the IPO in June 2021 would now be looking at an investment worth $1,273.
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