Shares of Doximity fell as Wall Street reassessed the company following a sequence of downgrades tied to a subdued fiscal 2027 outlook and increased scrutiny around AI-related spending and digital pharmaceutical advertising trends.
Two brokerages publicly adjusted their stances on the healthcare technology company. Baird moved its rating to Neutral from Outperform and cut its price target to $18 from $40. In its assessment, the firm said Doximity faces a "very long road ahead" before investments in AI start producing material returns. Analysts at Baird pointed to intensifying competition, softer demand patterns, recent leadership changes, and ongoing pressure on investor sentiment as reasons for the downgrade.
Part of Baird’s concern stems from the company’s guidance for fiscal 2027, which the brokerage said fell short of Street expectations. Doximity is guiding fiscal 2027 revenue of $664 million to $676 million, below consensus estimates around $697 million. Adjusted EBITDA guidance of $323 million to $335 million also lagged expectations, according to the brokerage.
That said, the company reported fiscal fourth-quarter revenue of $145.4 million and adjusted EBITDA of $65.8 million, both of which were slightly above consensus estimates. Despite that near-term performance, analysts remained cautious about the longer-term growth trajectory.
KeyBanc similarly downgraded the stock to Sector Weight from Overweight, citing a scarcity of near-term catalysts and worsening visibility into pharmaceutical marketing budgets. KeyBanc noted that drugmakers are increasingly pursuing lower-cost and AI-driven advertising solutions - a trend that could limit Doximity’s capacity to expand market share this year.
KeyBanc also warned that macroeconomic uncertainty and healthcare policy concerns are continuing pressure points for digital pharma advertising spending. The firm expects market growth to remain at or below 5% this year, which it said is below historical averages.
Analysts flagged timing risks around Doximity’s recently launched AI Search product. The company reportedly missed the key upfront selling season for that product and, as a result, the offering is unlikely to drive meaningful revenue until the second half of fiscal 2027 - despite Doximity having signed initial deals with major pharmaceutical manufacturers.
Both brokerages highlighted another common pressure: rising AI-related investments. Doximity expects to increase spending on AI infrastructure, engineering hires, peer-review tools, and brand marketing, and those costs are projected to compress margins in fiscal 2027.
Given these factors, investors and analysts are weighing a mix of recent operational beats against a softer outlook and higher near-term investment needs, particularly in AI and marketing, that could limit margin expansion and revenue upside in the coming fiscal year.