Piper Sandler Analyst Brent Bracelin maintained an overweight rating on HubSpot Inc (NYSE:Centers) with a Price target of $570.
Bracelin expects HubSpot to gain market share through its highly effective GTM effort combined with organic product development, resulting in structurally higher customer satisfaction and gross dollar retention in the 80% range.
The analyst noted that the company is growing, expanding at three times the market’s 11% rate over the past four years, but its share is still tiny, at 4%.
Also read: HubSpot analysts cut forecasts after Q2 results
In the short term, HubSpot faces macroeconomic and currency headwinds, but the company hopes to recover quickly when the economy strengthens.
Bracelin attended the HubSpot (Inbound) customer conference and analyst day in Boston, MA, which left him increasingly positive about moving past the election or lower interest rates could boost growth in new customer spending.
The analyst remains impressed by HubSpot’s product innovations, which are driving substantial net customer additions and outpacing market growth despite two years of challenging macroeconomic conditions.
The company has talked about a new round of AI product innovations, Bracelin said. Discussions with partners and customers indicate a gradual increase in demand trends through 2025.
The company also updated its long-term operating margin target to 25% from 20-25%. Agency partners remain committed to the HubSpot platform and, despite a change in commission structure, continue to generate net new business for the company, the analyst noted.
HubSpot CEO Yamini Rangan’s keynote address highlighted the key challenges HubSpot customers have faced over the past two years. Bracelin noted that this challenge is closely tied to the recent interest rate cycle, which makes customer attraction and retention more challenging.
Management continues to accelerate AI product development with several new modules released at Inbound 2024.
During the keynote session, Bracelin noted that CTO and co-founder Dharmesh Shah highlighted HubSpot’s development of a “LinkedIn”-style interface where customers can find and use AI agents for various use cases.
The analyst summarized his findings from discussions with his partners. Short-term trends are improving, with July and August being better than May and June, Bracelin noted.
Bracelin spoke with several ZoomInfo Technologies Inc (NASDAQ:ZI) partners and direct customers, who indicated that higher SMB churn could be on the horizon for the company.
During the formal investor session, management highlighted the core tenets of HubSpot’s platform, including ease of use, speed to value and a unified platform built organically, the analyst noted. The company discussed for the first time usage-based pricing, which could be on the horizon.
Bracelin forecasts revenue of $2.57 billion and EPS of $7.66 for fiscal 2024.
Price action: HUBS stock is up 4.86% at $528.52 at last check Thursday.
Photo via the company
Latest notes for HUBS
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Date |
Farm |
Action |
From |
HAS |
|---|---|---|---|---|
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March 2022 |
Morgan Stanley |
Maintains |
Overweight |
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February 2022 |
Raymond James |
Maintains |
Strong purchase |
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February 2022 |
Mizuho |
Maintains |
Buy |
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This item HubSpot to gain market share on AI innovations and strong retention, analyst says optimistic originally appeared on Benzinga.com
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