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On Tuesday, Cantor Fitzgerald analysts began coverage on Freshworks Inc (NASDAQ: FRSH), assigning the stock an Overweight rating and setting a price target of $20. The analysts highlighted the company’s valuation at 24 times the estimated earnings per share for calendar year 2026, viewing the shares favorably due to the robust growth potential and opportunity to enhance customer experience margins. According to InvestingPro data, the stock appears undervalued based on its Fair Value analysis, with 8 analysts recently revising their earnings estimates upward for the upcoming period.
Freshworks is recognized for its growth in the employee experience (EX) business, which is expanding at a rate exceeding 30% annually. This growth rate is one of the highest among software companies with annual recurring revenue over $100 million. The company has identified a niche market below ServiceNow (NYSE:NOW), which serves larger enterprises, allowing Freshworks to capitalize on opportunities in the IT service management (ITSM), IT operations management (ITOM), and IT asset management (ITAM) sectors. InvestingPro data reveals impressive gross profit margins of 84.4% and revenue growth of 20.5% in the last twelve months, with a strong financial health score rated as "GOOD."
The analysts noted that Freshworks is successfully cross-selling Device42, an ITAM solution, to its existing customers during renewals, offering a compelling value proposition. Device42 has proven instrumental in securing larger deals, with two out of the five largest deals in the first quarter of 2026 including this product.
Additionally, Freshworks’ recent improvements to its partner program are driving upmarket traction. These enhancements are attracting more partners, which are essential for long-term success in reaching larger market segments. The analysts believe this strategy will support the company’s growth and market position in the future.
In other recent news, Freshworks Inc. reported impressive financial results for the first quarter of 2025, surpassing analyst expectations. The company achieved non-GAAP earnings per share of $0.18, exceeding the consensus estimate of $0.13, and reported revenue of $196 million, which was higher than the projected $192 million. This revenue marks a 19% increase year-over-year. Freshworks also reported billings of $203 million, above the consensus estimate of $198 million, marking a 16% year-over-year increase.
In response to these strong earnings, JMP Securities reiterated a Market Outperform rating with a $27 price target. Meanwhile, Scotiabank (TSX:BNS) analyst Nick Altmann raised the price target for Freshworks to $18 from $14, maintaining a Sector Perform rating. Altmann noted Freshworks’ maintained billings growth outlook and positive fiscal year 2025 revenue forecast adjustments. The company has shown resilience against macroeconomic impacts, with a stable net revenue retention rate and growth in key performance indicators.
Freshworks continues to focus on AI innovation, with its Freddy Copilot offering enhancing productivity by about 30% within its installed base. The company’s Experience (EX) segment is growing at over 30%, while the Customer Experience (CX) segment maintains high single-digit growth rates. These developments reflect Freshworks’ strategic focus on AI and operational efficiency, positioning it well against broader economic challenges.
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