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On Thursday, UBS analyst Taylor McGinnis increased the price target on HubSpot Inc (NYSE:HUBS) shares to $740 from the previous target of $650, while keeping a Neutral rating on the stock. The adjustment followed a series of positive checks indicating a robust demand trend for HubSpot, particularly noting a strong performance in the fourth quarter of fiscal year 2024, which showed an improvement over the first half of the fiscal year and the entirety of fiscal year 2023. According to InvestingPro data, the stock is currently trading near its 52-week high of $762.47, reflecting market optimism about the company's prospects.
Partners of HubSpot have expressed optimism for the year 2025, with some anticipating an acceleration in their practice growth rates. This positive outlook seemed to mitigate concerns about the slow adoption of artificial intelligence (AI) technologies and increasing competition within the customer relationship management (CRM) sector. The company's impressive gross profit margin of 84.66% and strong revenue growth of 21.78% over the last twelve months support this optimistic stance.
Despite the enthusiasm surrounding HubSpot's business prospects and its potential as a small and medium-sized business (SMB) recovery play, McGinnis pointed out that the current valuation reflects much of this positive sentiment. With HubSpot trading at 13 times its calendar year 2025 enterprise value to sales (EV/S) and 77 times its enterprise value to free cash flow (EV/FCF), the analyst suggests that the market has already priced in the company's high growth potential. InvestingPro analysis supports this view, indicating that the stock is currently overvalued relative to its Fair Value. For deeper insights into HubSpot's valuation and 13 additional ProTips, consider exploring the comprehensive Pro Research Report available on InvestingPro.
McGinnis affirmed a belief in HubSpot's ability to maintain a high-teens to 20% growth rate. However, the firm's projections for the company's constant currency revenue growth in the fourth quarter of fiscal 2024 and the full fiscal year of 2025 remain unchanged at 15%. Meanwhile, the forecast for year-over-year revenue growth for fiscal year 2025 was revised downward to 13% from 15%, taking into account the recent fluctuations in foreign exchange rates. The stock has shown strong momentum with a 49.48% return over the past six months, though InvestingPro data suggests current valuations may be stretched.
In other recent news, HubSpot Inc. has seen notable developments. The company reported a revenue growth of 21.78% and a gross profit margin of 84.66%. Scotiabank (TSX:BNS) analyst Nick Altmann lifted the stock target to $825 while maintaining a Sector Outperform rating, following positive feedback from discussions with Elite HubSpot partners. Meanwhile, BofA Securities raised its price target to $850, citing HubSpot's potential within the CRM industry. Truist Securities also maintained a Buy rating and a $750.00 price target for HubSpot.
The company completed the acquisition of Frame AI, a firm specializing in AI-powered conversation intelligence, expected to enhance its ability to transform unstructured customer data into actionable insights. RBC Capital Markets, BofA Securities, Truist Securities, and Stifel have all shown confidence in HubSpot's strategic direction, with Stifel lifting its price target for HubSpot to $880 based on positive product updates.
Lastly, HubSpot announced the resignation of its Chief Legal Officer, Alyssa Harvey Dawson, effective December 31, 2024, with a transition plan in place until March 1, 2025. These recent developments signal HubSpot's continued focus on strategic initiatives aimed at driving future growth.
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