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Investing.com - UBS maintained its Buy rating and $19.00 price target on Freshworks Inc (NASDAQ:FRSH), which currently trades at $12.64, following the company’s release of new medium-term financial targets. According to InvestingPro data, analyst targets range from $16 to $27, with the stock currently appearing undervalued based on Fair Value analysis.
Freshworks announced goals to reach over $1.2 billion in revenue (representing 15-16% year-over-year growth compared to 12% organic growth expected in FY25) and more than $340 million in free cash flow (28-30% margin) by FY28, targeting a "Rule of 45" combined growth and profitability metric. The company’s impressive gross profit margin of 84.62% and current revenue growth rate of 19.78% suggest these targets may be achievable.
UBS noted investors might view these targets skeptically given uncertainty around seat-based SaaS models amid AI disruption and maturity concerns, as well as Freshworks’ track record of falling short of its previous $1 billion FY26 revenue target.
The firm kept its FY25 estimates unchanged but adjusted medium-term projections, raising revenue growth estimates to the low end of Freshworks’ outlook while lowering its FY28 free cash flow margin forecast to 30% from 32%.
UBS views Freshworks shares as attractively valued at CY26 estimated 3x EV/Sales and 13x EV/FCF if the company can sustain growth in the teens, though it acknowledged Freshworks faces a "show me story" situation with investors. InvestingPro analysis reveals multiple positive indicators, including strong financial health metrics and upward earnings revisions by analysts. Get the complete picture with InvestingPro’s comprehensive research report, available along with 8 additional ProTips for this stock.
In other recent news, Freshworks Inc has been the focus of several analyst updates following its Investor Day and other events. Cantor Fitzgerald reiterated its Overweight rating with a price target of $20.00, citing Freshworks’ management’s growth framework, which projects $1.3 billion in Annual Recurring Revenue by 2028. Oppenheimer maintained its Outperform rating with a $19.00 price target, highlighting growth opportunities and increased financial transparency shared during the company’s investor day. Needham also reiterated its Buy rating, setting a $25.00 price target, and noted Freshworks’ financial model aiming for a "Rule of 45" framework with accelerating revenue growth and increased cash flow leverage. JMP Securities continued its Market Outperform rating, assigning a $27.00 price target after the Investor Day event in San Francisco. These recent developments indicate a positive outlook from analysts, focusing on Freshworks’ growth potential and strategic initiatives.
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