Is Doximity A Good Long-Term Stock

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Doximity (DOCS) stock has lost 36.8% over the past year, against a 12.8% gain for the S&P 500. Your answer depends on whether Doximity's pharma ad business keeps producing the cash for its buyback. Over three years, the company has cut its diluted share count by 10.1%, so each share you hold owns a bigger slice of the company. How much faster have each share's earnings grown than the company's profit?

Doximity's Buyback Has Lifted Each Share's Earnings

Doximity's diluted earnings per share grew 7.5% a year over the three years to September 2026, compared with a 4.3% annual increase in net income. That leaves each share's earnings growing 3.2 percentage points a year faster than the company's overall profit.

Doximity spent $433 million repurchasing its own shares over the latest twelve months. Net of the stock it paid to employees, that spending equaled 4.8% of the company's market value. Shareholders who simply held onto their positions saw each share claim a larger part of Doximity's profit, regardless of what the stock price did.

Free Cash Flow Funded Most Of The Buyback

Most of the buyback came from the cash the business produced. Doximity's free cash flow over the latest twelve months covered about 69% of what it spent on buybacks, and it paid no dividend. The rest appears to have come from cash the company already held: its cash and short-term investments stood at $713 million at the end of September 2026, against $878 million a year earlier.

That cash comes from a business that needs little equipment: the company's capital spending took just 2.9% of its cash from operations over the latest twelve months. Management said its AI makes money mainly through the ad products it sells to pharma companies, such as AI search. On the November 5, 2026 call, management said Doximity remains debt free and had about $347 million left in its repurchase program.

What Doximity's Smaller Share Count Does Not Show

Earnings per share fell over the latest twelve months, however. Doximity's net income dropped 44.8% from a year earlier. Diluted earnings per share fell slightly less, by 42.9%, meaning the smaller share count only softened the decline.

Profit, not the buyback, presents the current worry for a shareholder. Doximity's operating margin was 26.3% over the latest twelve months, compared with 39.7% a year earlier. Management said most of the rise in its cost of revenue reflects scaling its AI investment. Management also noted that the fiscal 2027 increase in stock pay is mainly tied to a grant to its AI research team, an expense it expects to ease in fiscal 2028.

Management raised its fiscal 2027 revenue forecast to a midpoint of $681 million, from $676 million in August, citing the second quarter's results and growing visibility into its commercial AI pipeline. If free cash flow shrinks along with profit, it will cover even less of a buyback this size.

So far, Doximity's buyback has kept shrinking the share count, and the cash its business produces has paid for most of it. You can be less sure that the cash keeps up with the buyback. Free cash flow against what Doximity spends on buybacks is the number to watch when it is expected to report in February 2027.

Does This Mean You Should Act On DOCS?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

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