On Wednesday, Goldman Sachs reaffirmed its Buy rating on Braze Inc (NASDAQ:BRZE) stock with a consistent price target of $65.00. Following Braze Inc's Analyst Day, which took place on September 23 during its customer conference Forge 2024 in Las Vegas, the firm expressed a reinforced understanding of the factors contributing to the business's slowdown.
These factors include the introduction of a new cohort analysis by Braze and industry feedback indicating a resistance to change within marketing teams, as well as the complexities of adopting advanced technologies.
Braze Inc's platform is recognized for its role in facilitating greater automation in response to several ongoing secular changes affecting front office application stacks. The technology updates presented by the company at the event are seen as building upon this strategic advantage. Goldman Sachs highlighted these updates as a part of their takeaway from the conference.
The firm also noted that while Braze is positioned favorably for future growth, it may take some time for the company to accelerate its market share gains. The analyst day provided insights into the company's strategic plans and technological advancements, which are expected to contribute to its long-term success.
In addition, Goldman Sachs outlined updates to their financial model for Braze, mentioning the company's intentions to return to a Rule of 40 profile. The Rule of 40 is a benchmark in the software industry that suggests a company's combined growth rate and profit margin should equal or exceed 40% for healthy growth.
Braze Inc's commitment to this financial principle indicates a focus on balancing growth with profitability. The reaffirmed price target suggests confidence in the company's strategy and future performance in the market.
In other recent news, Braze Inc. witnessed several adjustments to its stock price targets by other analyst firms.
TD Cowen revised its price target to $45.00 from $52.00, but maintained a Buy rating.
Piper Sandler held steady with an Overweight rating and a $51.00 target.
Loop Capital reiterated a Buy rating with a $75.00 target, citing potential growth in AI.
Oppenheimer adjusted its target to $51.00 from $60.00, yet retained an Outperform rating.
DA Davidson also revised their target to $55.00 from $65.00, maintaining a Buy rating.
These adjustments followed Braze's recent investor event where the company's management provided insights into the company's operations and future plans. They increased their long-term gross margin targets to a range of 69-74% and projected the fourth-quarter fiscal year 2025 net revenue retention at 110%.
Braze Inc. reported a 26% increase in its fiscal second quarter 2025 revenue, reaching $145.5 million, and added 61 new customers, bringing the total to 2,163. The company's third quarter revenue is anticipated to be between $147.5 million and $148.5 million, with full fiscal year 2025 revenue projected to be between $582.5 million and $585.5 million.
InvestingPro Insights
As Goldman Sachs maintains a bullish stance on Braze Inc (NASDAQ:BRZE), real-time data from InvestingPro offers additional context for investors considering the company's stock. Braze Inc holds a market capitalization of approximately $3.56 billion, reflecting its position in the market. Despite the stock's recent performance, with a price decrease of over 27% in the past month, analysts have revised their earnings upwards for the upcoming period, signaling potential optimism for the company's future financial results.
InvestingPro Tips highlight that Braze Inc has more cash than debt on its balance sheet, which could provide financial flexibility, and its liquid assets exceed short-term obligations, indicating short-term financial health. However, the company has not been profitable over the last twelve months, with a negative P/E ratio of -30.29. Yet, analysts predict the company will be profitable this year, which could be a turning point for investors watching for signs of a financial turnaround.
While the stock is trading near its 52-week low, the InvestingPro product lists additional tips (totaling 10) that could provide further insights into Braze Inc's investment potential. Interested investors can explore these tips to gain a deeper understanding of the company's financial status and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.