On Monday, Goldman Sachs made a positive shift in their stance on Klaviyo Inc (NYSE:KVYO), upgrading the stock from Neutral to Buy, while maintaining a 12-month price target of $36.00. The adjustment comes despite Klaviyo's shares having underperformed by 22% compared to the Nasdaq over the past three months.
The investment firm identified several catalysts that could enhance Klaviyo's stock value within the year. One of the main drivers is the expectation that concerns over potential disruptions to Klaviyo’s business model, due to changes in email spam filtering, are exaggerated. Goldman Sachs anticipates that forthcoming details from the company’s fourth-quarter earnings report on February 27 will help dispel current bearish sentiments.
Goldman Sachs also predicts that Klaviyo will continue to gain market share due to its unique approach to the software infrastructure that supports its marketing applications. Additionally, the firm foresees a possible rise in estimates, factoring in any short-term reductions in customer contracts. This optimism is supported by company-specific factors such as gains in the high-end market segment, ongoing penetration with Shopify (NYSE:SHOP) Plus, and the introduction of new products, all within a stable consumer spending environment.
Despite expectations of stock volatility in the near term, especially with the upcoming clarity on the impact of new email marketing deliverability standards and a lock-up expiry two days after the earnings report, Goldman Sachs sees a favorable trajectory for Klaviyo's stock performance over the next year.
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