On Thursday, BMO Capital Markets adjusted its outlook on HubSpot Inc (NYSE: NYSE:HUBS) shares, increasing the company's price target to $690 from $570 while maintaining an Outperform rating. This change reflects the firm's recognition of HubSpot's robust performance and continued strong execution in a challenging market environment.
The analyst from BMO Capital praised HubSpot for delivering another quarter of solid performance across all key metrics. The firm's confidence in HubSpot is further bolstered by the company's effective management and strategic initiatives, especially in the integration of artificial intelligence (AI) throughout its platform.
The financial institution's forecast for HubSpot's fiscal year 2024 has been revised upwards. However, the projections for the December quarter's revenue and operating margin remain largely the same, attributed to a conservative outlook in the management's guidance, which the analyst believes is a prudent approach.
HubSpot's efforts in embedding AI into its services have been highlighted as a significant factor in its success. The firm's analyst underscored HubSpot's position as a leading innovator in front office solutions, which justifies a premium valuation for the company's shares.
In summary, BMO Capital has reaffirmed its positive stance on HubSpot by reiterating an Outperform rating and elevating the price target to $690, signaling confidence in the company's future performance and market position.
In other recent news, HubSpot Inc. has reported a robust third-quarter performance with an impressive 20% year-on-year increase in revenue, recording $669.7 million. This figure exceeded analysts' expectations of $646.95 million. The company's adjusted earnings per share also saw a notable rise, reported at $2.18, surpassing the consensus estimate of $1.91.
The firm's operating profits surged by 36% year-over-year, pushing the operating margin to 18.7% from 17.2% in the previous quarter. This increase was partially attributed to a one-time benefit of $7 million. In addition, the company added 10,000 new customers in the third quarter alone, marking a 23% increase from the previous year.
HubSpot's fourth-quarter guidance also surpassed expectations, forecasting an adjusted EPS of $2.18-$2.20 and revenue between $672 million and $674 million.
Analyst firm Needham maintained its Buy rating on HubSpot shares with a $730 price target, while Piper Sandler adjusted its stance on the company, downgrading the stock from Overweight to Neutral despite increasing the price target to $640 from $570. These are among the recent developments for HubSpot.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on HubSpot's financial position and market performance, complementing BMO Capital's bullish outlook. As of the last twelve months ending Q3 2024, HubSpot reported impressive revenue of $2.51 billion, with a robust revenue growth of 21.78%. This aligns with the analyst's praise for HubSpot's solid performance across key metrics.
One of the standout InvestingPro Tips highlights HubSpot's impressive gross profit margins, which is reflected in the data showing a gross profit margin of 84.66% for the same period. This exceptional profitability at the gross level underscores the company's efficiency in its core business operations and supports BMO's view of HubSpot's strong execution.
Another relevant InvestingPro Tip indicates that net income is expected to grow this year, which corroborates BMO's upward revision of forecasts for fiscal year 2024. This positive outlook is further supported by the company's strong market performance, with a 29.75% price total return over the last three months.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for HubSpot, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.