Bank of America just raised its EUR/USD forecast
On Thursday, Loop Capital Markets maintained a Buy rating on Klaviyo Inc (NYSE:KVYO) and raised the price target to $60 from $45 following the company’s solid fourth-quarter performance. Klaviyo’s revenue surged by 34% year-over-year, surpassing both the analyst’s and the Street’s expectations of 28%. This growth was in line with the robust results of Shopify Inc (NYSE:SHOP) (covered by A. Chukumba), which also received a Buy rating. According to InvestingPro data, Klaviyo maintains impressive gross profit margins of 77.6% and currently trades at $47, near its 52-week high of $49.55.
Klaviyo provided a positive revenue growth guidance for fiscal year 2025, projecting a 23-24% increase. Although this figure is slightly below the estimates of analysts and the Street, the company’s management expressed a cautious optimism, suggesting potential for an upside scenario if the current market conditions persist. The company has announced plans to invest in growth, particularly in international markets, and expects to maintain flat operating margin guidance for the year. InvestingPro analysis shows the company maintains strong financial health with a GOOD overall score, supported by robust cash flow and growth metrics. Discover 12 additional exclusive ProTips and comprehensive financial analysis with an InvestingPro subscription.
Despite a sequential decline in net revenue retention (NRR) from 110% in the third quarter to 108% in the fourth quarter, management has noted stabilization in NRR from the third to the fourth quarter. This stabilization indicates that NRR may remain at the current level. Analysts at Loop Capital believe that Klaviyo’s significant revenue growth, which has been consistent at 34-35% year-over-year each quarter, is primarily driven by the acquisition of new customers. This growth comes despite the NRR decrease from 117% in the fourth quarter of 2023 to 108% in 2024.
Klaviyo’s market strategy focuses on fast-growing merchants and capitalizes on the opportunity to replace legacy systems. The company’s target market is vast and largely untapped, which, coupled with the legacy replacement cycle opportunity, positions Klaviyo well for continued growth. With a total addressable market (TAM) exceeding $16 billion, Klaviyo is expected to leverage its efficient, low-touch go-to-market approach to sustain revenue growth in the 20s percentage range over the next few years while maintaining low-teen operating margins, even as it invests for growth.
The stock is currently trading at a discount compared to its hypergrowth peers, with CY25/CY65 enterprise value to sales multiples of 12x and 10x, respectively. These multiples are below the peer average of 17x and 14x. However, given Klaviyo’s growth trajectory and the momentum in its mid-market push, Loop Capital anticipates that the stock will appreciate significantly as investor confidence in the company’s growth strategy solidifies. The new price target of $60, derived from a discounted cash flow analysis, reflects growth-adjusted revenue multiples that are still favorable compared to its peers. With a market capitalization of $12.67 billion and strong return metrics, InvestingPro’s comprehensive analysis indicates the stock is trading above its calculated Fair Value. Access the full Pro Research Report, available for 1,400+ US stocks, for detailed insights into Klaviyo’s valuation and growth prospects.
In other recent news, Klaviyo Inc. reported a notable fourth-quarter earnings performance, with revenues increasing by 34% year-over-year, surpassing expectations and demonstrating strong growth during the holiday season. This financial success has been reflected in several analysts’ actions, with Needham raising its price target to $56, citing the company’s robust sales and record customer additions. Mizuho (NYSE:MFG) also increased its price target to $52, maintaining an Outperform rating, and highlighted Klaviyo’s strong presence in the mid-market and international sectors. Piper Sandler raised its target to $53, driven by Klaviyo’s solid growth momentum, particularly in the enterprise and international markets.
Additionally, Klaviyo launched a new customer relationship management (CRM) platform tailored for B2C brands, marking a significant expansion beyond its marketing roots. This new platform integrates marketing, service, and analytics to enhance customer engagement and loyalty. Canaccord Genuity raised its target to $50, maintaining a Buy rating, and expressed confidence in Klaviyo’s growth drivers, including its partnership with Shopify and international expansion. The company’s recent transparency about its partnership with Woo Commerce is expected to positively impact future guidance, as noted by Needham analysts.
Klaviyo’s strong execution and multiple avenues for growth have positioned it well in the market, with analysts expressing optimism about its future prospects. The company’s efforts to expand its product offerings, including the new CRM system, underscore its evolution and strategic execution. These developments reflect Klaviyo’s continued momentum and potential for further growth in the B2C market.
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