Hubspot's Valuation Keeps Analyst On Sidelines Despite Upbeat Fundamental Outlook: Retail Holds Muted View

Bernstein analysts noted that the current valuation was at the higher end of historical levels and was at a premium to software peers.

HubSpot, Inc. (HUBS) shares will likely be in the spotlight after research firm Bernstein initiated coverage of the customer relationship management platform company.

Bernstein analysts initiated coverage of HubSpot stock with a ‘Market Perform’ rating and a $693 price target. The firm’s price target implied an upside potential of about 15% for the stock.

Analysts expressed optimism about the Cambridge, Massachusetts-based company’s fundamentals but were concerned about the stock’s valuation. They believed the company could deliver higher growth than Street’s estimate due to continuing market share gains.

The analysts noted that the current valuation was at the higher end of historical levels and was at a premium to software peers. 

Therefore, upside potential is capped, Bernstein said.

Koyfin’s database showed that HubSpot stock traded at a forward price-earnings (P/E) multiple of 65.9 times.

A day ago, Stephens initiated coverage of HubSpot stock with an ‘Overweight’ rating and $769 price target. The firm noted that customers consider the company’s software as a “must-have,” given its very fast return on investment (ROI) and time to value. 

The firm added that customer data also showed high usage and high value of artificial intelligence (AI) features.

HubSpot’s fourth-quarter results, released in mid-February, showed 21% year-over-year (YoY) revenue growth to $703.2 million and adjusted earnings per share (EPS) of $2.32. Both metrics were ahead of expectations. 

The stock climbed after the earnings print despite the mixed guidance.

On Stocktwits, retail sentiment toward Hubspot stock turned to ‘neutral’ (50/100) by the end of Wednesday’s session from the ‘bearish’ mood that prevailed a day ago. The message volume remained ‘extremely low.’

HubSpot stock ended Wednesday’s session up 1.31% at $604.77, clawing back some of the 13% loss it has experienced this year.

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