On Thursday, Mizuho Securities adjusted its outlook on HubSpot Inc (NYSE:HUBS) shares, reducing the price target to $650 from the previous $700, while maintaining a "Buy" rating on the company's stock.
This adjustment follows HubSpot's first-quarter financial report, which surpassed consensus expectations with a $20 million revenue beat and operating margins that were 90 basis points ahead of consensus predictions.
The company realized this performance despite experiencing incremental macroeconomic challenges in the first quarter, a trend noted across the software industry, particularly among firms with exposure to small and medium-sized businesses (SMBs). In light of these headwinds, HubSpot has decided to keep its revenue guidance unchanged for the time being.
The unchanged guidance takes into account several factors affecting the company's financial outlook. HubSpot is navigating through further macroeconomic deterioration, as well as a $10 million impact from changes to its seat model and a $10 million foreign exchange headwind.
Despite these challenges, Mizuho Securities remains optimistic about HubSpot's potential for sustained growth in the long term, once the current macroeconomic pressures ease. The firm's decision to maintain a "Buy" rating reflects this confidence in HubSpot's future performance.
The revised price target of $650 is attributed to a general de-rating among software peers, which implies a 13 times enterprise value to next twelve months (EV/NTM) revenue multiple for HubSpot. This new target takes into consideration the broader valuation trends within the software sector.
InvestingPro Insights
As HubSpot Inc (NYSE:HUBS) navigates the challenges of a shifting economic landscape, real-time data from InvestingPro provides a snapshot of the company's current financial health. HubSpot boasts an impressive gross profit margin of 84.08% in the last twelve months as of Q4 2023, underscoring its strong ability to control costs relative to revenue. This aligns with Mizuho Securities' positive outlook on the company's potential for sustained growth.
Despite not being profitable over the last twelve months, analysts predict that HubSpot will turn a profit this year, which could signal a pivotal moment for the company's financial trajectory. The company's market capitalization stands at $30.04 billion, with a significant revenue growth of 25.38% in the same period, reflecting its robust expansion amidst market headwinds.
InvestingPro Tips highlight HubSpot's liquid assets, which currently exceed its short-term obligations, indicating a strong liquidity position. Additionally, while the stock price movements have been volatile, with a 42.14% price uptick over the last six months, it suggests that investors may see potential in the company's strategies and market position.
For those looking to delve deeper into HubSpot's financials and future prospects, InvestingPro offers additional insights. There are 12 more InvestingPro Tips available, which can be accessed by visiting: https://www.investing.com/pro/HUBS. To enhance your investing strategy with these insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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