On Monday, Squarespace (NYSE: SQSP) received an updated price target from JMP Securities, which has been increased to $45.00 from the previous $40.00, while the firm maintained a Market Outperform rating on the company's shares. The revision follows a detailed analysis of Squarespace's financials, taking into account previous price increases, the acquisition of Google (NASDAQ:GOOGL) Domains, and foreign exchange considerations.
According to JMP Securities, Squarespace's recent guidance, which indicates a revenue growth slowdown to 9% year-over-year compared to the 11.5% growth in the fourth quarter of 2023, is seen as overly cautious. The firm suggests that the company's outlook does not fully reflect the current market stability, strong top-of-funnel performance, or the potential for future price increases and upselling opportunities with Google Domains customers.
The analyst also noted the industry's shift towards more rational strategies, with competitors like Wix (NASDAQ:WIX) focusing on do-it-for-me services since the introduction of Wix Studios. This observation points to a market environment where Squarespace's conservative revenue projection may not account for its actual potential.
Furthermore, Squarespace's announcement of a $500 million repurchase authorization in the last quarter is anticipated to play a role in narrowing the valuation gap between Squarespace and its competitor Wix. JMP Securities reiterated their confidence in Squarespace by maintaining the Market Outperform rating.
The price target upgrade to $45 reflects JMP Securities' expectation that Squarespace will perform better than its current guidance suggests. The firm's analysis implies that Squarespace is positioned to capitalize on the market's stability and its strategic initiatives, which could lead to a stronger financial performance than the company has forecasted.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.