UBS lifts HubSpot stock rating to Buy, cuts target to $675

On Tuesday, UBS analyst Taylor McGinnis upgraded shares of HubSpot Inc (NYSE: NYSE:HUBS) from Neutral to Buy, despite reducing the price target to $675 from the previous $775. The revision follows a notable decline in the company’s shares, which have fallen 35% since mid-February. According to InvestingPro data, the stock has declined 24.28% year-to-date, though it maintains an impressive 85% gross profit margin and healthy revenue growth of 21% over the last twelve months. McGinnis cited the current valuation of HubSpot at 9 times the CY25E EV/S, which is below the two-year average of 11 times, as a key factor in the improved outlook.

The analyst pointed out that HubSpot’s conservative FY25 guidance makes it less likely to require a significant cut, and the company could experience a quick recovery if the current macroeconomic headwinds are found to be overstated. McGinnis believes that the market is undervaluing HubSpot’s specific growth drivers which could mitigate short-term downside risks and contribute to sustained long-term growth.

These growth drivers include HubSpot’s strategic shift towards serving larger clients, increased adoption of multiple HubSpot offerings due to vendor consolidation and platform purchases, and changes to the company’s pricing model. Although the analyst anticipates that small and medium business (SMB) spending might be temporarily impacted, he notes that HubSpot is trading at a two times premium to its small and mid-size application peers, compared to a historical average premium of four times. This, according to McGinnis, presents an attractive entry point for investors considering the long-term potential of the company. For deeper insights into HubSpot’s valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which includes detailed analysis of the company’s financial health, growth trajectory, and market position.

In other recent news, HubSpot has introduced a new Executive Severance Plan for its named executive officers, excluding its co-founders. This plan provides severance benefits for executives terminated without cause, including one year’s salary, a pro-rated target bonus, and COBRA premium coverage for 12 months. Additionally, HubSpot unveiled a suite of AI-driven features aimed at enhancing the efficiency of small and medium-sized businesses. The Spring 2025 Spotlight includes over 200 features, such as updates to Breeze Agents and Marketing Hub Enterprise, and the introduction of three new Workspaces.

In terms of analyst activity, RBC Capital Markets reduced its price target for HubSpot shares to $800 from $950, maintaining an Outperform rating. The firm noted challenges such as tariff headwinds and concerns about SMB stability but expressed optimism about HubSpot’s market penetration. Similarly, BofA Securities cut its price target to $850 from $950, keeping a Buy rating, citing deteriorating consumer sentiment but recognizing HubSpot’s significant margin improvements. Raymond (NSE:RYMD) James, on the other hand, maintained an Outperform rating with a $980 price target, highlighting strong growth in European markets. These developments reflect a mix of caution and confidence among analysts regarding HubSpot’s future performance.

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