Piper Sandler Downgrades HubSpot, But Raises Price Target Amid Robust Growth

Piper Sandler analyst Brent A. Bracelin downgraded HubSpot Inc HUBS to Neutral from Overweight, with an increased price target of $520 (from $482).

The analyst believes the company's risk-reward seems less favorable after the stock gained over 80% YTD (vs. S&P 500 +15.8%), benefiting from stabilizing demand and optimism related to generative AI.

Nevertheless, Bracelin thinks HUBS' newly launched starter tier promotions aided in driving the highest new customer metrics in two years, with additions at over 9K.

The analyst is pleased with the company's new ChatGPTpowered products, strong balance sheet, and over $200 million in annual FCF generation.

Bracelin raised their 2024 growth estimate for HUBS to 22% (from 20%), expecting improvement in average subscription revenue per customer on further vendor consolidation tailwinds.

The analyst thinks the company has strong growth prospects through accelerating generative AI and acquisitions, expecting its cloud platform (over $2 billion run-rate) to double to over $4 billion in 3-4 years.

Bracelin estimates revenue and EPS of $2.088 billion and $4.83 in 2023 and $2.542 billion and $6.15 in 2024. 

Also Read: Investors Cheer HubSpot Performance: Why Is The Stock Shooting Higher Thursday

Price Action: HUBS shares are trading lower by 1.88% at $511.07 on the last check Thursday.