On Monday, BofA Securities updated its outlook on HubSpot Inc (NYSE: NYSE:HUBS), raising the price target to $850 from the previous $780 while maintaining a Buy rating.
This adjustment comes after constructive meetings with the company's CEO, Yamini Rangan, which took place last Thursday. The firm expressed a bullish stance on HubSpot's growth potential within the $125 billion CRM industry, citing the company's leading cloud platform as a key advantage in serving the vast small and medium-sized business (SMB) segment.
The analyst from BofA Securities highlighted artificial intelligence (AI) as a significant catalyst for market consolidation and an expansion of the total addressable market (TAM) into the broader sales services industry.
"The use cases for HubSpot in the front office provide meaningful value stemming from sales productivity gains and revenue uplift," BofA added.
Despite a largely unchanged macroeconomic environment, there are indications of some improvement.
BofA Securities reiterated its Buy rating and top pick designation for HubSpot, with increased confidence in the company's growth reacceleration. The firm anticipates that HubSpot's growth could potentially reaccelerate to mid-20s percentage in an upside scenario, propelled by AI advancements and a better macroeconomic outlook as the fiscal year 2025 progresses.
The new price objective of $850 is based on a 12 times multiple of the company's estimated 2026 revenue, adjusted from the previous 11 times multiple. This valuation also accounts for a 0.5x growth adjustment in light of the expected 22% growth rate. The analyst's comments convey a robust vote of confidence in HubSpot's strategic direction and market positioning moving forward.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.