HubSpot To See Stable Demand Trends Amid Cautious Optimism In 2H, Bullish Analyst Says

RBC Capital Markets analyst Rishi Jaluria reiterated an Outperform rating on HubSpot, Inc. HUBS, raising the price target to $625 from $500.

The analyst thinks the demand environment for HubSpot seems unchanged, with in-line to slightly softer new customers but in-line to somewhat better existing customer expansions.

All three partners of the company noted low new logo activity in April-May, the analyst notes. However, two of three saw a strong rebound in June (one partner said June was the best month for new logos in 2023).

Jaluria presented "cautious optimism" for HUBS in 2H, with sustained multi hub adoption, including a notable Service Hub displacement of a large competitor.

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

Within the installed base of one partner, adoption by hub stands at 100% Marketing, ~60-65% Sales, ~50% CMS, ~30-35% Service, and ~20-25% Operations, Jaluria adds. 

Partners view Chatspot as early (in Alpha), but are encouraged by HubSpot's relative innovation and view content assistant (in Beta) as an immediate opportunity, the analyst notes.

Partners expect more GenAIrelated announcements at Inbound in September and see enhancing conversational intelligence capabilities as low-hanging fruit, Jaluria adds.

For FY23, the analyst sees revenues of $2.085 billion, with adjusted EPS of $4.72.

For FY24, the analyst forecasts revenues of $2.457 billion, with adjusted EPS of $5.37.

Price Action: HUBS shares are trading higher by 3.30% to $553.80  on the last check Tuesday.