Bernstein SocGen sets HubSpot stock target at $693, rates Market Perform

On Thursday, Bernstein SocGen Group initiated coverage on HubSpot Inc (NYSE: NYSE:HUBS), assigning the company a "Market Perform" rating and setting a price target of $693. The target represents potential upside from the current price of $604.77, though InvestingPro analysis suggests the stock may be overvalued. HubSpot, known for its cloud-based sales and marketing software platform, has been recognized for its focus on business-to-business (B2B) customers in the small and medium-sized business (SMB) segment.

The firm acknowledged HubSpot’s successful expansion of its product portfolio, as well as its ability to attract new customers and up-sell to existing ones, which has resulted in the company achieving best-in-class market share gains. This success is reflected in HubSpot’s impressive 85% gross profit margins and robust revenue growth of 21% over the last twelve months. According to Bernstein SocGen, revenue growth is expected to be the primary driver for HubSpot’s stock in the near future. InvestingPro subscribers can access 13 additional key insights about HubSpot’s growth potential and financial health.

Bernstein SocGen expressed confidence in HubSpot’s potential to outperform market expectations, citing the company’s strong position to continue capturing market share. However, the analysts also noted that as the customer relationship management (CRM) market matures and HubSpot’s revenue base expands, the benefits of market share gains could diminish. At that point, HubSpot will need to focus on delivering profitability, which Bernstein SocGen believes the company is capable of achieving.

While optimistic about HubSpot’s fundamental story, the firm pointed out that the current valuation is on the higher end compared to historical levels and is at a premium relative to its software peers. With a market capitalization of $31.57 billion and trading at elevated earnings and revenue multiples, this valuation is partly due to the perception of HubSpot as a beneficiary of a potential SMB upswing and a shift in investor preference towards low-capital expenditure software vendors. Consequently, Bernstein SocGen suggests that the upside potential for HubSpot’s stock might be limited. For a comprehensive analysis of HubSpot’s valuation metrics and growth prospects, investors can access the detailed Pro Research Report available on InvestingPro.

In other recent news, HubSpot Inc has seen several analysts update their outlooks following the company’s latest earnings report. UBS analyst Taylor McGinnis raised the price target to $775, citing a 20% revenue growth in constant currency for the fourth quarter of fiscal year 2024, alongside a two-point increase in net revenue retention. Stifel analysts increased their price target to $925, maintaining a Buy rating, and highlighted HubSpot’s strategic initiatives, including the integration of Breeze AI functionalities. TD Cowen’s Derrick Wood also raised the target to $800, noting strong performance in the upmarket segment despite some concerns over SKU upgrades. RBC Capital Markets set a new price target of $950, impressed by HubSpot’s retention metrics and strategic use of artificial intelligence, while maintaining an Outperform rating. Truist Securities increased their target to $900, emphasizing the company’s strong fourth-quarter results and significant increases in large deal activity. These developments reflect a general optimism among analysts about HubSpot’s future performance, despite some conservative guidance from the company.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.