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On Friday, UBS reiterated its Buy rating on Braze Inc (NASDAQ:BRZE) with a steady price target of $51.00. According to InvestingPro data, analyst targets range from $39 to $75, with 16 analysts recently revising their earnings estimates upward for the upcoming period. UBS’s assessment follows Braze’s fourth-quarter earnings, which showed positive performance indicators despite broader market concerns about consumer health potentially affecting business-to-consumer (B2C) software companies and the recent departure of the company’s Chief Customer Officer.
Braze’s fourth-quarter financials indicated a 22% year-over-year revenue increase, with the addition of 85 new logos, the most since the second quarter of fiscal 2024, and a 23% growth in committed remaining performance obligations. InvestingPro data shows the company maintaining a robust 68.64% gross profit margin and achieving 28.31% revenue growth over the last twelve months. The company’s guidance for fiscal 2026 forecasts a 16% year-over-year revenue increase and a 4% EBIT margin.
UBS highlighted Braze’s in-period net revenue retention rate of approximately 109% in the fourth quarter of fiscal 2025, which remains robust, only slightly down from around 110% in the second and third quarters of fiscal 2025. While Braze has not provided specific timing for a market bottom, UBS suggests that it could occur as early as the first quarter of fiscal 2026, potentially serving as a key catalyst for the company’s shares.
The firm’s positive outlook is also based on Braze’s reaffirmation of a gradual increase in revenue growth before total trailing twelve months net revenue retention rates bottom out. UBS anticipates the potential for approximately 20% year-over-year revenue growth in fiscal 2026, assuming that macroeconomic headwinds do not intensify.
UBS’s favorable view on Braze’s stock is further supported by factors specific to the company, including improved execution, the cycling of challenging COVID-era renewals, and opportunities for replacing incumbent providers. InvestingPro analysis reveals strong financial health indicators, with the company holding more cash than debt and maintaining a healthy current ratio of 1.99. These elements contribute to the firm’s confidence in Braze’s prospects, reflected in the stock’s current enterprise value to sales ratio of 6x for the calendar year 2025, based on after-hours pricing. For deeper insights into Braze’s valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Braze Inc reported a strong fourth-quarter performance, surpassing consensus earnings estimates and setting a promising revenue growth target of 16% for Fiscal Year 2026. This positive financial outlook has been well-received, with analysts from Stifel, Oppenheimer, Needham, and JPMorgan maintaining favorable ratings on the company. Stifel increased its price target to $50, while Oppenheimer set theirs at $51, highlighting Braze’s robust end-of-year results and strategic acquisition plans. The company announced its largest acquisition to date, purchasing AI decision and personalization platform OfferFit for $325 million. This move is anticipated to enhance Braze’s product offerings, particularly in AI capabilities, and provide a competitive edge in the market.
Despite some concerns about potential risks associated with the acquisition, such as financial synergies and timing, analysts remain optimistic about Braze’s growth potential. Needham analysts noted the company’s best quarterly performance in over a year, with significant customer additions and a halt to a two-year deceleration in Customer Revenue Performance Obligations (cRPO). Meanwhile, JPMorgan emphasized Braze’s strong year-end performance, with revenue and operating margins exceeding expectations. The company’s strategic focus on expanding its AI functionalities and maintaining steady guidance amidst economic uncertainty underscores its resilience and growth potential.
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