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On Friday, Needham maintained its Hold rating on HubSpot Inc (NYSE:HUBS) and reiterated the $900.00 price target. Following the company’s first-quarter performance, which showed impressive gross profit margins of 84.83% and strong revenue growth of 19.17% according to InvestingPro data, the firm’s analyst Joshua Reilly provided insights into the financial outcomes and strategic moves. Despite HubSpot’s solid first-quarter results, the company chose not to adjust its full-year 2025 revenue guidance upward to reflect the quarter’s success. However, the FY25 revenue forecast did see a $50 million increase, attributed to favorable foreign exchange rate fluctuations as the U.S. dollar weakened. InvestingPro analysis indicates the company maintains a GOOD overall financial health score, with analysts expecting profitability this year despite current trading levels suggesting overvaluation.
The analyst highlighted that investors’ primary interest this quarter revolves around HubSpot’s introduction of a new credit-based pricing model for Breeze Agents within the Pro and Enterprise tiers, set to launch in early June. At present, about 1% of the company’s customers are using Breeze Agents without incurring charges. The upcoming pricing model is anticipated to provide more clarity on user engagement trends once the credit system takes effect.
HubSpot’s management pointed out that while there are power users of the product, the broader impact will depend on how usage trends evolve after the implementation of the new pricing system. According to the analyst, there is an expectation that HubSpot may eventually extend Breeze Agents to the Starter tier. Nonetheless, the company might leverage this functionality to encourage customers to upgrade to higher-tier plans in the long term, thereby potentially driving revenue growth.
The firm’s analyst did not change the price target following the first-quarter report, signaling a wait-and-see approach as the market assesses the upcoming pricing model changes. The Hold rating suggests a neutral stance on the stock, indicating that the firm does not see significant upside or downside potential at the current price level relative to the set target. With analyst targets ranging from $610 to $980 and a consensus recommendation of 1.53 (Buy), investors seeking deeper insights can access comprehensive valuation metrics and 10+ additional ProTips through InvestingPro’s detailed research reports.
In other recent news, HubSpot Inc. reported its first-quarter 2025 earnings, surpassing expectations with an EPS of $1.78, slightly above the forecast of $1.77. Revenue for the quarter reached $767 million, exceeding the anticipated $699.88 million and marking an 18% year-over-year growth. Despite these positive results, the company’s stock experienced a decline, reflecting broader market concerns about future growth and macroeconomic uncertainties. HubSpot’s customer base expanded by 19%, reaching 258,000, indicating strong demand for its offerings. Analyst firms have provided mixed assessments, with JPMorgan maintaining an Overweight rating but lowering the price target to $775 from $850, while Evercore ISI raised its price target to $700, maintaining an In Line rating. HubSpot has also increased its revenue guidance for fiscal year 2025 by approximately $50 million, attributing the increase to favorable foreign exchange movements. The company is focusing on AI integration, with features like Customer Agent gaining traction, doubling its customer adoption to approximately 2,500 users. HubSpot’s guidance for the full year projects revenue between $3.036 billion and $3.044 billion, indicating a 16% growth projection.
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