Benchmark has initiated coverage on Klaviyo Inc (NYSE: NYSE:KVYO), a marketing technology company, assigning a Buy rating to the stock alongside a price target of $42.00.
The firm highlighted Klaviyo's strategic approach to the market, emphasizing its integration of various marketing technologies such as email, SMS, Customer Data Platforms (CDP), and Artificial Intelligence/Machine Learning (AI/ML).
The unified marketing tech stack is seen as a key factor in the company's growth.
The analyst from Benchmark pointed out that Klaviyo's collaboration with Shopify (NYSE:SHOP) is a significant component of the company's long-term revenue prospects.
The relationship with Shopify is considered an essential foundation that supports Klaviyo's trajectory. The analyst's outlook suggests that near-term (NT) opportunities to move up-market and potential Free Cash Flow (FCF) margin catalysts are well balanced with long-term (LT) possibilities in pricing, vertical, international expansion, and CDP developments.
To be sure, Klaviyo's revenue outperformed the forecast by $10 million, and operating profits saw a 65% increase year-over-year. In response to these impressive figures, Piper Sandler revised its revenue estimates for Klaviyo upward by $15 million for the year 2024, while also raising the stock price target from $30.00 to $34.00.
Simultaneously, KeyBanc Capital Markets upgraded Klaviyo's stock from a Sector Weight rating to Overweight, reflecting the company's robust growth trajectory, particularly in Q2 2024, where revenue acceleration reached 35.0%. This growth was attributed to a record number of net-new $50K customers and international expansion, notably in the EMEA region.
In addition, Barclays and TD Cowen have shown confidence in Klaviyo's growth prospects, upgrading the stock rating to overweight and maintaining a Buy rating respectively. These recent developments come in the wake of Klaviyo's Q1 2024 results, where the company surpassed estimates with revenue and adjusted EBIT figures exceeding expectations by 3.9% and 23.0% respectively.
Lastly, Klaviyo has announced a collaboration with TikTok to integrate its customer segmentation tools with the social media platform, aiming to streamline ad targeting and improve relationships with potential buyers.
InvestingPro Insights
Klaviyo's recent performance and financial metrics provide additional context to Benchmark's bullish outlook. According to InvestingPro data, Klaviyo has demonstrated strong revenue growth, with a 38.38% increase over the last twelve months as of Q2 2024, reaching $809.63 million. This robust growth aligns with Benchmark's positive view on the company's market strategy and potential for expansion.
Despite the impressive top-line growth, it's worth noting that Klaviyo currently operates at a loss, with an adjusted operating income of -$374.68 million over the same period. This reflects the company's focus on growth and market penetration, which is typical for high-growth tech companies in their early stages.
InvestingPro Tips highlight that Klaviyo's stock price has shown strong momentum, with a 41.42% price return over the past three months. This suggests that the market is increasingly recognizing the company's potential, as emphasized by Benchmark's analysis.
For investors seeking a deeper understanding of Klaviyo's prospects, InvestingPro offers 15 additional tips, providing a comprehensive view of the company's financial health and market position.
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