Doximity (DOCS -2.73%) was a hot stock when it went public in 2021. Its shares would rise to a value of more than $100 in September of that year before ultimately falling heavily. Today, at around $40 per share, it's nowhere near those highs. However, its valuation was already too rich at those levels.

Its business, which centers around a networking platform for doctors that makes it easy for them to connect with peers and patients, has continued to grow at impressive rates. Now, at a lower valuation, is the stock a good buy today? Let's see.

Why the business looks promising

A big reason to buy the stock is for the potential that Doximity possesses. Businesses are becoming more digitized, and the need for efficient workflows, even among doctors, is important. And that's one of the things Doximity helps to do, making it easier for them to collaborate. Physicians also have access to a dialer that can mask their phone numbers while still showing patients that the call is coming from their doctor's office.

The company says that over 80% of doctors in the U.S. are members of what Doximity says is "the largest community of healthcare professionals in the country."Pharmaceutical manufacturers and healthcare systems are the company's customers. Doctors don't pay for the service, but their adoption and use of it are key to Doximity's success.

Doximity estimates that its total addressable market is worth $18.5 billion. The company is just scratching the surface of that.

The company is growing but at a declining rate

Doximity's sales rose by 66% to $343.5 million for the year ended March 31. However, one challenge is that its growth rate has been slowing down in recent quarters.

DOCS Revenue (Quarterly YOY Growth) Chart.

DOCS Revenue (Quarterly YoY Growth) data by YCharts.

This year, the healthcare company projects that its revenue will be between $454 million and $458 million, for a growth rate of approximately 33%. The slowing growth is a key reason investors have likely been less bullish on the stock of late. 

Doximity's stock still isn't cheap

Over the past 12 months, shares of Doximity have declined by 22%, which is worse than the S&P 500's losses of 12% during that period. However, it's more of an overdue correction than anything, given how much of a premium the stock was at before -- at one point, trading for more than 60 times sales. And you could argue that its valuation remains steep. Here's how it looks with respect to sales and earnings compared with other tech-oriented healthcare stocks.

DOCS PS Ratio Chart.

DOCS PS Ratio data by YCharts.

Doximity's valuation has definitely improved, but investors are paying a hefty premium for it right now. Its forward price-to-earnings ratio of 57 is more than three times the multiple of 16 for the average stock in the Health Care Select Sector SPDR Fund .

Should you buy Doximity today?

Doximity's growth rate is slowing, but at north of 30%, it's still impressive. Its lean business generates profit margins of 45%, which could make the stock's earnings multiples shrink quickly as the business continues to expand. Given the current bear market, it wouldn't be surprising to see the stock fall further. However, if you're willing to buy and hold, this can make for an excellent growth stock to load up on today.