On Friday, KeyBanc Capital Markets maintained its Overweight rating on shares of Klaviyo Inc (NYSE: NYSE:KVYO) and increased the price target to $45.00 from the previous $42.00. The adjustment reflects the company's robust momentum, evidenced by its impressive 35.41% revenue growth and 77.61% gross profit margins. According to InvestingPro data, the stock has gained 41.25% year-to-date, trading near its 52-week high of $41.00.
The firm's decision to raise the price target is based on an updated terminal multiple for Klaviyo, which aims to better represent the company's performance and the expansive software universe. The analysis included a 10-year Discounted Cash Flow (DCF) and Free Cash Flow to the Firm per Share (FCFF/share).
KeyBanc's methodology for arriving at the new $45 price target incorporated several financial metrics. They assumed a beta of 1.7, indicative of the stock's volatility relative to the market, and a discount rate of 14.6%. Additionally, a terminal multiple of 28 times was used in their calculations.
The new price target suggests a Calendar Year 2026 Enterprise Value to Revenue (EV/revenue) multiple of 9.6 times and an EV/FCFF multiple of 66.7 times. These figures are set against the backdrop of the broader software sector, which averages 7.3 times and 38.6 times for these multiples, respectively.
Currently, Klaviyo's stock is trading at 8.2 times CY26 EV/revenue and 57.7 times CY26 EV/FCFF, indicating a premium compared to the sector.
In other recent news, Klaviyo Inc. has been the subject of several positive analyst adjustments following strong Q3 results.
Needham, Loop Capital, Baird, and Cantor Fitzgerald have raised their price targets for Klaviyo to $46, $45, $45, and $47 respectively, while maintaining positive ratings on the company's stock. Stifel initiated coverage on Klaviyo with a Buy rating and a price target of $45, signifying confidence in the company's growth potential.
The company reported a revenue increase of 34% year-over-year, exceeding expectations. This growth has been attributed to a significant rise in larger customers and expansion into international markets.
Klaviyo has also revised its compensation strategy, transitioning some stock-based compensation to cash, a move expected to reduce annual share dilution by approximately 8%-10%.
Klaviyo also announced a collaboration with TikTok to integrate its customer segmentation tools, aiming to streamline ad targeting. These developments, along with the company's robust financial performance, have kept Klaviyo in the spotlight. Please note that these are recent developments and no conclusions or summaries are being made in this article.
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