Needham reiterates Buy rating on Sprout Social stock amid growth stabilization

Investing.com - Needham maintained its Buy rating and $32.00 price target on Sprout Social Inc. (NASDAQ:SPT) following investor meetings with the company’s leadership team. According to InvestingPro data, the stock is currently trading near its 52-week low of $13.33, suggesting significant upside potential to Needham’s target.

The research firm expressed increased optimism about growth stabilization with potential upside, citing continued growth in consumer social media usage. Needham specifically noted how changing consumer product search preferences and accelerated content creation on platforms like Canva are driving increased brand engagement on social platforms. This optimism is supported by Sprout’s impressive 77.63% gross profit margins and 14.79% revenue growth over the last twelve months.

Sprout Social’s revenue outlook remains consistent with previous guidance, with enterprise-driven $50k+ ARR (Annual Recurring Revenue) customers and multi-product attachments helping to offset pressure in the mid-market segment.

The company’s Influencer Marketing offering is positioned as more of a 2026 growth driver, though Needham believes its increasing importance in marketing strategies could fuel significant growth for several years.

Needham’s assessment followed meetings with Sprout Social’s CEO Ryan Barretto, CFO Joe Del Preto, VP of IR & Corporate Development Alex Kurtz, and IR Manager Lexi Johnson.

In other recent news, Sprout Social reported its second-quarter 2025 earnings, surpassing analyst expectations with an earnings per share of $0.18, compared to the forecasted $0.15. The company also exceeded revenue projections, achieving $111.8 million against the anticipated $110.93 million. This revenue beat included a $1.1 million surplus in the second quarter, with operating profit margins improving by 110 basis points. Additionally, Sprout Social noted strong additions of large customers during this period. Cantor Fitzgerald maintained its Neutral rating for Sprout Social, with a price target of $24.00, following these earnings results. In another development, Sprout Social published a shareholder letter from co-founder and board member Aaron Rankin. The letter was included as part of a regulatory filing with the Securities and Exchange Commission, although no further details about its content were disclosed.

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