Five9 stock holds neutral rating and $25 target from DA Davidson

On Friday, DA Davidson maintained a Neutral stance on Five9, Inc (NASDAQ:FIVN), with a consistent price target of $25.00. The research firm’s analyst Gil Luria cited the company’s solid performance in the first quarter of 2025, which surpassed expectations in both revenue and earnings. According to InvestingPro data, Five9’s stock currently trades at $25.56, with analyst targets ranging from $23 to $67. The company appears undervalued based on InvestingPro’s Fair Value analysis, despite trading at a high EBITDA multiple of 90.8x. However, despite the positive start to the year, Five9’s management opted to maintain its revenue guidance for the remainder of 2025, effectively reducing the forecast for the upcoming quarters by $8 million.

The decision to uphold the 2025 revenue guide reflects a degree of caution due to macroeconomic uncertainties. Additionally, Five9’s leadership has set financial goals for 2027, aiming for the company to achieve the Rule of 40. This financial benchmark is met when a company’s combined revenue growth rate and adjusted EBITDA margin equal or exceed 40%. For Five9, reaching this target would involve adjusted EBITDA margins of 25%-30% or higher, along with year-over-year revenue growth of 10%-15%, assuming the macroeconomic environment remains stable.

DA Davidson’s analysis supports the Neutral rating by taking into account the current limited visibility into Five9’s top-line growth. The price target of $25.00 is based on a multiple of two times the company’s projected 2026 sales. This valuation reflects the research firm’s measured outlook on the stock, considering the potential challenges and growth prospects that lie ahead for Five9.

As of the last trading session, Five9’s stock price will be observed by investors to see how it aligns with DA Davidson’s expectations and the company’s strategic targets for the coming years. The guidance provided by Five9’s management, along with the financial targets for 2027, will continue to be key factors in assessing the company’s trajectory and investment potential. InvestingPro subscribers can access 8 additional valuable insights about Five9, including detailed analysis of its financial health, growth prospects, and market position. Get the complete picture with InvestingPro’s comprehensive research report, part of its coverage of over 1,400 US stocks.

In other recent news, Five9, Inc. reported a strong performance for the first quarter of 2025, surpassing expectations with earnings per share (EPS) of $0.62, compared to the forecasted $0.49, and achieving a revenue of $279.7 million, which exceeded the anticipated $272.29 million. The company’s revenue grew by 13% year-over-year, with subscription services increasing by 14%. Despite these positive results, UBS analyst Taylor McGinnis adjusted the price target for Five9 to $35, down from $55, while maintaining a Buy rating, citing a slowdown in subscription revenue growth and extended sales cycles for larger deals. Similarly, Evercore ISI reduced its price target to $40 from $55, continuing to rate the stock as Outperform, while acknowledging challenges such as delayed deals due to macroeconomic factors.

Cantor Fitzgerald maintained its price target for Five9 at $36 and reaffirmed its Overweight rating, noting the company’s revised revenue guidance and increased earnings per share forecast, thanks to stringent cost management and AI-driven bookings. Five9 has introduced a midterm target model for 2027, aiming for 10%-15% revenue growth and 25%-30% profit margins, supported by AI initiatives that saw a 32% increase in the first quarter. The company also highlighted its strategic partnerships with Salesforce (NYSE:CRM) and ServiceNow (NYSE:NOW), emphasizing the role of AI in enhancing customer experience platforms. Despite challenges in international markets, Five9 remains focused on its long-term growth strategy, driven by transformation initiatives and AI investments.

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