On Monday, Canaccord Genuity adjusted its price target for Braze Inc (NASDAQ:BRZE) shares, a customer engagement platform, reducing it to $50 from the previous $65, while still affirming a Buy rating on the stock. The adjustment follows Braze's fourth fiscal quarter results, which led to a significant drop in the company's share price.
The lowered price target reflects challenges highlighted by the company's performance, including a decrease in the number of new logos, or net customer additions, which was notably the lowest since the company went public. This decline is concerning, but according to the company's management, strong upsell activities in new regions and business units might offset the impact of lower new customer counts.
The company's cRPO-based booking growth, which measures the future revenue expected from customers, was reported at 33% for the quarter, suggesting that new business activities might not be as weak as the drop in customer count implies. Nonetheless, Canaccord Genuity notes that an improvement in customer count growth is necessary going forward.
Additionally, Braze's revenue growth guidance for the current year has been set at a midpoint of 21%, slightly below the expectations of Wall Street analysts. This conservative forecast comes despite the company's history of surpassing expectations and the fact that their Last Twelve Months Net Revenue Retention (LTM NRR) stands at 117%.
Canaccord Genuity suggests that there could be potential for growth forecasts to increase as the year progresses, indicating a belief that the company has set a low threshold that it may exceed.
InvestingPro Insights
In light of Canaccord Genuity's revised price target for Braze Inc, InvestingPro data and tips provide additional context for investors considering the stock. Braze currently holds a market capitalization of approximately $3.93 billion, indicating its significant presence in the market despite recent headwinds. The company's revenue growth of nearly 32.74% over the last twelve months as of Q4 2024 reflects a strong increase, which may reassure investors looking for growth potential. However, the company's P/E ratio stands at -32.56, and the adjusted P/E ratio for the same period is -29.69, suggesting that profitability is still a challenge.
InvestingPro Tips highlight that Braze holds more cash than debt, which could provide a cushion against financial instability, and that the stock is in oversold territory according to the RSI, potentially indicating an opportunity for investors. Additionally, with liquid assets exceeding short-term obligations, the company appears to be in a solid position to meet its immediate financial commitments. On the downside, analysts have revised their earnings downwards for the upcoming period, and profitability this year is not anticipated. The stock has seen a significant price drop over the last three months, and it trades at high revenue and Price / Book valuation multiples.
For investors seeking a deeper analysis, InvestingPro offers additional insights and metrics. There are 10 more InvestingPro Tips available for Braze Inc, which can be accessed at https://www.investing.com/pro/BRZE. For those looking to take advantage of these insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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