Macquarie sets HubSpot stock Outperform with $730 target

On Monday, Macquarie initiated coverage on HubSpot Inc (NYSE:HUBS), a leading provider in customer relationship management (CRM) software, assigning an Outperform rating and setting a price target of $730.00. Currently trading at $621.26, the stock sits between its 52-week range of $434.84 to $881.13. According to InvestingPro data, HubSpot has demonstrated impressive growth with revenue increasing by 21.07% over the last twelve months. The new rating is based on HubSpot’s rapid growth within the CRM sector, particularly among companies with 2 to 2,000 employees. Macquarie attributes this success to HubSpot’s comprehensive offering, which integrates marketing, sales, service, and commerce capabilities.

The research firm recognizes several positive investment factors for HubSpot, including potential revenue growth driven by improved net expansions, a revised pricing model, and a strategic shift to acquire larger customers with over 100 employees. InvestingPro analysis reveals the company maintains industry-leading gross profit margins of 85.03%, with 13 additional ProTips available to subscribers providing deeper insights into the company’s financial health and growth prospects. Macquarie anticipates that if HubSpot achieves significant revenue upside, comparable to or exceeding the performance in fiscal year 2024, it could result in the stock’s outperformance.

Macquarie’s analysis also reveals opportunities for HubSpot to enhance its operating margins beyond the company’s current long-term goal of a 25% non-GAAP operating margin. This improvement could further contribute to the stock’s positive performance trajectory in the upcoming years.

However, the analyst acknowledges potential risks that could affect HubSpot, including macroeconomic factors. A recession could lead to challenges in acquiring new customers, higher customer attrition rates, especially within the small and medium-sized business (SMB) segment, and could impact seat expansions and edition upgrades.

While Macquarie notes that HubSpot’s valuation seems fair, the firm also points out mixed results when compared to peers using various metrics such as enterprise value to revenue (EV/revenue) and enterprise value to free cash flow (EV/FCF) multiples, as well as their proprietary Rule of X methodology. Based on InvestingPro’s comprehensive Fair Value analysis, the stock appears to be trading above its Fair Value, though the company maintains strong financial health with an overall score of 2.49 (FAIR). For investors seeking deeper insights, InvestingPro offers an extensive Pro Research Report covering HubSpot among 1,400+ US equities, providing actionable intelligence through intuitive visuals and expert analysis.

In other recent news, HubSpot Inc has seen several notable developments that are capturing the attention of investors. UBS analyst Taylor McGinnis raised HubSpot’s price target to $775, maintaining a Neutral rating, after the company reported a fourth-quarter revenue growth of 20% in constant currency and a net revenue retention rate increase to 104%. Stifel analysts increased their price target to $925, continuing to recommend a Buy rating and highlighting HubSpot’s strong performance and strategic initiatives, including a seat-based pricing model and AI integration. TD Cowen analyst Derrick Wood also adjusted HubSpot’s price target to $800, citing solid performance in the upmarket segment but expressing concern over slower SKU upgrades. Meanwhile, RBC Capital Markets raised their price target to $950, maintaining an Outperform rating, and praised HubSpot’s strategic use of AI and strong retention metrics. Bernstein SocGen set a price target of $693, rating the stock as Market Perform, and noted HubSpot’s successful product portfolio expansion and market share gains. Despite some concerns about valuation and growth expectations, analysts generally express optimism about HubSpot’s future performance. These recent developments reflect a mix of strategic growth initiatives and cautious optimism from analysts.

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