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Investing.com -- Mizuho initiated coverage on Braze (NASDAQ:BRZE) with an Outperform rating and a $40 price target, calling the current weakness in the stock a buying opportunity ahead of what it sees as a transition year that sets up stronger growth and margin expansion.
Braze shares are down about 32% this year as the company paused its margin improvement plans to integrate OfferFit, an AI platform it acquired.
But Mizuho (NYSE:MFG) argues that the Street is underestimating the payoff from this move, alongside stabilizing customer retention and recovering marketing budgets.
Braze operates in a large but under-penetrated $45 billion market for customer engagement software.
Mizuho said Braze’s strength lies in its real-time, cross-channel messaging platform, which allows marketers to react to customer behavior without engineering support—setting it apart from older marketing cloud platforms like Salesforce (NYSE:CRM) and Adobe (NASDAQ:ADBE).
AI is expected to be a key growth driver, with Braze’s Sage AI and OfferFit capabilities enabling automation and personalization. Mizuho said Braze is evolving beyond messaging into a broader intelligent engagement platform.
The firm forecasts 20%+ annual revenue growth through FY27, with upside potential as OfferFit gains traction among enterprise customers. Its base case models FY27 revenue at $831 million, with a bull case of $876 million. It also sees operating margins expanding to 7% in FY27, 230 basis points above current consensus.
Mizuho values Braze at 5x forward revenue, in line with mid-growth peers, and believes the current multiple, about 3.5x, doesn’t reflect the company’s potential.
With growth and profitability set to improve, the firm sees FY26 as a turning point and views current levels as an attractive entry.