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On Tuesday, Cantor Fitzgerald analysts initiated coverage on Sprout Social Inc . (NASDAQ: NASDAQ:SPT), assigning a Neutral rating and setting a price target of $24.00. The analysts based their price target on shares trading at 2.4 times their calendar year 2026 revenue estimate, aligning with the current market multiple. According to InvestingPro data, the stock has declined over 30% in the past six months, though analysis suggests the company is currently trading below its Fair Value.
Sprout Social is reportedly gaining market share in the Social Media Management sector. While market saturation appears higher than some total addressable market analyses suggest, the company’s acquisition of Tagger Influencer Marketing management is expected to provide incremental opportunities to sustain low-teens growth over the coming years. The company maintains impressive gross profit margins of 77.6% and has achieved revenue growth of 17.8% over the last twelve months.
Social commerce is highlighted as a significant growth area for Sprout Social, though the timing and magnitude remain uncertain. The company is enhancing its capabilities for integration with networks and commerce features, but social networks are still determining their strategies for platform openness to third-party services.
The analysts also note that Sprout Social is experiencing improvements in margin gains and free cash flow conversion, indicating that there is considerable potential for further growth in these areas.
Cantor Fitzgerald’s coverage initiation provides insights into Sprout Social’s positioning and future growth prospects within the social media management and social commerce markets.
In other recent news, Sprout Social Inc. reported a strong financial performance for the first quarter of 2025, with total revenue reaching $109.3 million, marking a 13% increase compared to the previous year. The company achieved a record non-GAAP operating margin of 11.5%, demonstrating solid operational efficiency. Despite the impressive results, Oppenheimer revised its price target for Sprout Social to $32.00 from $38.00 while maintaining an Outperform rating, citing concerns over the deceleration of business growth. Needham, however, reaffirmed a Buy rating with a $32.00 price target, highlighting positive feedback from a customer call with Caesars (NASDAQ:CZR) Entertainment, which underscored Sprout Social’s value in the social media marketing industry.
Additionally, Sprout Social’s introduction of AI-powered products and strategic partnerships were key highlights during the earnings call, emphasizing the company’s focus on innovation and market expansion. The company provided Q2 revenue guidance of $110.4 million to $111.2 million, with full-year 2025 revenue guidance ranging from $448.9 million to $453.9 million. Analyst Brian Schwartz from Oppenheimer noted that while the price target was lowered, the valuation multiples for Sprout Social have mostly bottomed out, suggesting reduced risks for the current year. The company’s strategic initiatives and strong customer retention continue to support a positive outlook, despite macroeconomic challenges.
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