What the bad jobs report means for markets
On Wednesday, Oppenheimer analyst Brian Schwartz increased the price target on Freshworks Inc (NASDAQ:FRSH) to $24 from $22, while retaining an Outperform rating on the shares. According to InvestingPro data, Freshworks, currently valued at $5.4 billion, appears undervalued based on its Fair Value analysis. Schwartz highlighted the company’s strong fourth-quarter performance, which surpassed consensus expectations, and provided optimistic guidance for 2025. Freshworks’ robust results were evident in various areas including billings, annual recurring revenue (ARR), and margin growth. The analyst also noted the positive reception of the Freddy AI co-pilot and the sustained growth in the employee experience business, alongside a cash margin exceeding 20%.
Freshworks’ performance in the midmarket segment was particularly strong, with over 60% of total ARR originating from these customers, indicating the company’s successful strategy in targeting higher-value clients. Despite these positive developments, Schwartz pointed out areas of concern such as the underperformance of the customer experience (CX) business and net revenue retention (NRR), as well as unimpressive billings guidance. InvestingPro subscribers can access 8 additional key tips about Freshworks and dive deeper into the company’s comprehensive financial health analysis, which currently shows a GOOD overall rating.
Schwartz remains confident in Freshworks’ ability to maintain solid growth and profit margins, suggesting that the company’s financial estimates may have reached their lowest point. With a strong current ratio of 3.26, the company maintains ample liquidity to support its growth initiatives. The fourth-quarter results demonstrate improved sales execution, and with the small and medium-sized business (SMB) market poised for a cyclical recovery and conservative guidance in place, there is potential for estimates to rise in 2025. This outlook has led to the raised price target of $24, reflecting optimism in the company’s future performance.
In other recent news, Freshworks Inc. has been the focus of several analyst firms following its impressive fourth-quarter results. The company reported non-GAAP earnings per share (EPS) of $0.14, surpassing the consensus estimate of $0.10, and revenue of $195 million, exceeding the forecasted $190 million. This marks a 22% increase year-over-year, including a benefit from the acquisition of Device 42.
Canaccord Genuity maintained a Buy rating on Freshworks and increased its price target to $23, citing the company’s robust IT/ESM market presence, efficient operating leverage, and a newly announced $400 million stock repurchase program. Morgan Stanley (NYSE:MS) also showed a positive outlook by raising its price target to $21, noting Freshworks’ strong performance in the fourth quarter and stability in its Experience (EX) and Customer Experience (CX) sectors.
JMP Securities increased its price target for Freshworks to $27, emphasizing the company’s better-than-expected performance bolstered by organic growth and the strategic acquisition of Device 42. These recent developments reflect the confidence of analysts in Freshworks’ continued growth and market performance.
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