Evercore ISI raises HubSpot price target to $700, keeps rating

On Friday, Evercore ISI analyst Kirk Materne increased the price target for HubSpot Inc (NYSE:HUBS) shares to $700 from the previous target of $610, while maintaining an In Line rating. With a current market capitalization of $34.76 billion and impressive gross profit margins of 84.83%, HubSpot continues to show strong fundamentals. According to InvestingPro analysis, the company is currently trading above its Fair Value, reflecting high market expectations. Materne’s assessment followed HubSpot’s first-quarter performance, which he described as solid. He noted that the company’s guidance remained largely unchanged despite a potentially more volatile macroeconomic environment, which he considered a prudent approach.

HubSpot’s quarterly results slightly exceeded expectations, with whispers suggesting a $20 million beat, while the actual figure was closer to $15 million. However, Materne pointed out that HubSpot’s management had anticipated these results. They also observed no significant change in customer buying behavior through April, although there was a shift toward more value-oriented discussions.

The analyst highlighted the promising growth in the adoption of HubSpot’s Customer Agent, which has doubled to approximately 2,500 customers. The company’s AI-infused products, such as Content Hub, are also gaining traction, with attach rates tripling year over year. These developments suggest potential for an ’AI lift’ in the coming years, supported by the company’s strong revenue growth of 19.17% over the last twelve months. InvestingPro data reveals 8 additional key insights about HubSpot’s growth trajectory and financial health that could impact its AI initiatives.

Materne also touched on HubSpot’s plans to roll out a hybrid pricing model for its Agentic AI platform, which will include consumption credits for Pro and Enterprise tiers and the option to purchase additional credit packs. While he believes that consumption will not significantly impact revenue in FY25, the enthusiasm for the potential value it could provide to customers remains high.

In conclusion, while Materne remains positive about HubSpot’s long-term prospects, he sees the current risk/reward balance as more even at the current stock levels. The broader analyst consensus shows optimism, with price targets ranging from $535 to $980. The new price target of $700 reflects approximately 10 times the expected enterprise value to sales ratio, taking into account adjustments to revenue estimates and foreign exchange impacts. For a deeper understanding of HubSpot’s valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which provides detailed analysis of the company’s financial health and market position.

In other recent news, HubSpot Inc. reported its first-quarter 2025 earnings, exceeding analysts’ expectations with an earnings per share (EPS) of $1.78, slightly above the forecasted $1.77. The company’s revenue reached $767 million, surpassing the anticipated $699.88 million, marking an 18% year-over-year increase. Despite these positive financial results, broader concerns about future growth and macroeconomic uncertainties influenced the market’s reaction. HubSpot’s customer base expanded by 19% to 258,000, demonstrating strong demand for its offerings. The company also announced its first-ever share repurchase program, authorized up to $500 million, signaling confidence in its long-term growth prospects. Additionally, HubSpot provided a full-year revenue guidance ranging from $3.036 billion to $3.044 billion, projecting a 16% growth. The company expects its non-GAAP operating profit to be between $558 million and $562 million, with an EPS forecast of $9.29 to $9.37. HubSpot’s commitment to AI integration was emphasized, with plans to embed AI across its entire platform, although the company does not anticipate a material revenue impact from AI monetization in 2025.

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