Cantor Fitzgerald lifts Freshworks stock target to $22

On Wednesday, Cantor Fitzgerald analyst Brett Knoblauch increased the price target for Freshworks Inc (NASDAQ:FRSH) shares to $22 from the previous $18, while continuing to recommend an Overweight rating on the stock. Currently trading at $17.86, with a market capitalization of $5.4 billion, Freshworks shows strong momentum with a 60% price return over the past six months. Knoblauch’s assessment indicates that Freshworks is trading at approximately 6.7 times its expected 2025 enterprise value to sales (EV/Sales) and 27 times its enterprise value to free cash flow (EV/FCF). When adjusted for growth, the analyst noted that Freshworks’ valuation is around 50% lower than that of its closest competitors, which include Atlassian Corporation Plc (NASDAQ:TEAM), HubSpot Inc (NYSE:HUBS), and ServiceNow Inc (NYSE:NOW). According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculation.

The analyst highlighted Freshworks’ strategic moves upmarket, referencing several instances where the company outperformed its largest competitor in the recent quarter. With impressive revenue growth of 20.45% and industry-leading gross profit margins of 83.84%, the company continues to demonstrate strong operational execution. Knoblauch pointed out that over 60% of the company’s annual recurring revenue (ARR) is now generated from mid-market and enterprise customers. This shift in customer base, according to the analyst, is not yet fully reflected in the company’s valuation. InvestingPro subscribers can access 8 additional key insights about Freshworks’ financial health and growth prospects through exclusive ProTips.

Looking ahead to 2025 and beyond, Knoblauch expressed confidence in Freshworks’ unique positioning in the market, citing its product features, competitive pricing, and advancements in artificial intelligence (AI). The analyst believes that Freshworks offers an accessible solution for implementing enterprise AI across various roles in both the front and back office.

The revised price target and positive outlook from Cantor Fitzgerald come as Freshworks continues to make strides in expanding its market reach and enhancing its product offerings in the competitive software industry.

In other recent news, Freshworks Inc. has been the focus of several analyst updates following the company’s strong fourth-quarter performance. Scotiabank (TSX:BNS) analyst Nick Altmann raised the price target for Freshworks to $19.00, citing the company’s modestly surpassing financial outlook for FY25 and the growth of its Enterprise ARR and Customer Experience ARR. Meanwhile, Oppenheimer analyst Brian Schwartz increased the price target to $24 from $22, highlighting the company’s robust results in billings, annual recurring revenue (ARR), and margin growth.

On the other hand, Canaccord Genuity maintained a Buy rating on Freshworks, raising its price target to $23.00 from $19.00. The firm noted Freshworks’ presence in a robust IT/ESM market and the potential for continued operating leverage through 2025. Simultaneously, Morgan Stanley (NYSE:MS) showed a positive outlook on Freshworks by increasing the price target on the company’s shares to $21.00 from $19.00. The firm cited a strong fourth-quarter performance and a fiscal year 2025 revenue growth guide that aligned with expectations.

Lastly, JMP Securities increased its price target for Freshworks shares to $27, up from the previous $24, following the company’s better-than-expected fourth-quarter results. The company’s non-GAAP earnings per share (EPS) reached $0.14, and revenue for the quarter was $195 million, marking a year-over-year increase of 22%. These recent developments highlight the growing confidence in Freshworks’ financial performance and future prospects.

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