Monday - DA Davidson has revised the price target for Braze Inc (NASDAQ:BRZE) shares, a customer engagement platform, dropping it to $55 from the previous $65, while still affirming a Buy rating on the shares. This adjustment follows the firm's attendance at Braze's investor day in Las Vegas on Sunday, where the company presented its long-term financial framework and provided insights into customer trends and macroeconomic challenges.
The company's management discussed growth expectations, focusing on the trajectory of the Dollar-Based Net Retention (DBNR) rate, which was approximately 110% at the end of the second quarter of fiscal year 2024, slightly down from the last twelve months' metric of 114%. This key indicator reflects the company's success in maintaining and expanding revenue from existing customers.
In addition to the DBNR figures, management at Braze outlined several strategies that could help the company achieve the "rule of 40" status within the next four years. This rule is a benchmark for tech companies, indicating that their combined growth rate and profit margin should total 40% or more, symbolizing a balance between growth and profitability.
DA Davidson's decision to reiterate the Buy rating yet reduce the price target is based on a revised revenue projection for fiscal year 2026. The new target is pegged at 7 times the firm's updated forecast for the company's revenue in FY26. Despite the lowered price target, the maintained Buy rating suggests a continued positive outlook on the company's stock performance.
In other recent news, 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 projected to be between $147.5 million and $148.5 million, with full fiscal year 2025 revenue expected to be between $582.5 million and $585.5 million.
BTIG, JPMorgan, and Goldman Sachs maintained their Buy ratings on Braze, highlighting the company's strong market position, innovative platform, and commitment to the Rule of 40 principle, which balances growth with profitability.
TD Cowen, despite lowering its price target for Braze, maintained its Buy rating, highlighting Braze's strategies aimed at achieving a return to the Rule of 40. Piper Sandler kept its Overweight rating and Loop Capital maintained its Buy rating, citing potential growth in AI. These firms' stance suggests a positive outlook for Braze Inc, with the company's innovative platform and expanding partnerships reinforcing its market position.
These are recent developments, with analysts from multiple firms expressing increased confidence in Braze's long-term growth prospects. However, they noted that the short-term growth trajectory could be influenced by the current macroeconomic environment. The analysts' assessments could provide useful insights for investors considering Braze Inc.
InvestingPro Insights
Recent InvestingPro data offers additional context to DA Davidson's analysis of Braze Inc (NASDAQ:BRZE). The company's market cap stands at $3.41 billion, with a revenue of $535.87 million for the last twelve months as of Q2 2025, showing a robust growth rate of 31.12%. This aligns with the company's focus on growth strategies discussed at the investor day.
InvestingPro Tips highlight that Braze holds more cash than debt on its balance sheet and has liquid assets exceeding short-term obligations. These factors could contribute to the company's financial stability as it pursues its growth objectives and aims for the "rule of 40" status within the next four years.
However, it is worth noting that Braze is currently trading near its 52-week low, with a 25.82% price decline over the past month. This recent stock performance may have influenced DA Davidson's decision to lower the price target while maintaining a Buy rating.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for Braze, providing a deeper understanding of the company's financial position and market performance.
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