Street Calls of the Week
Investing.com -- Jefferies says Klaviyo’s AI-related concerns that have weighed on the stock are already reflected in its valuation as it began coverage on marketing software maker Klaviyo with a Buy rating and $32 price target. The brokerage expects margins to improve as the company expands and grows its higher-value customer base.
Jefferies projects Klaviyo’s revenue to nearly double to about $2 billion by 2028, a compound annual growth rate of about 20%, supported by rising international adoption and new product offerings.
It expects operating margins to reach about 15% over that period as scale improves profitability.
Morgan Stanley analysts have also said Klaviyo was evolving from an email marketing provider to its expansion into customer marketing tools, which would open door to longer-term growth and margin expansion.
The firm said Klaviyo’s close integration with Shopify gives it a strong foothold in online retail marketing, though dependence on the e-commerce platform, about 78% of annual recurring revenue, poses a risk if partnership terms change.
Jefferies said there was growing traction among larger enterprise clients, with customers generating more than $50000 in annual revenue accounting for roughly a third of Klaviyo’s business and expanding more than 35% year-on-year. It said this shift toward bigger accounts should lift customer retention and lower sales costs.
The bank acknowledged investor worries that AI tools could disrupt Klaviyo’s model but said the company’s data-driven platform and partnerships should help it stay central to digital marketing spending.
At roughly 4.6 times forward revenue, Klaviyo trades near record-low valuation levels versus peers. Jefferies says shares are a leveraged play on digital commerce recovery.