HubSpot (NYSE:HUBS) share rose more than 5% today after Piper Sandler upgraded the company to Overweight from Neutral and raised its price target to $610.00 from $515.00. This revision is driven by several key factors:
Survey data indicating a rebound in marketing priority: The July 2023 CIO survey initially indicated a decline in spending intentions for marketing and sales applications. However, the latest 2024 CIO survey reveals a significant rebound, particularly in marketing, suggesting a stronger market outlook for HubSpot. Analysts raised their estimates by $60 million for 2024, assuming 19.4% growth.
Recovery in website traffic: HubSpot's website traffic showed month-over-month improvement in October and November, with unique visitors exceeding 20M, indicating potential growth stabilization in the second half of 2024.
Clearbit acquisition impact: The acquisition of Clearbit, a $150M deal closed on Dec 4, is expected to add $1.8M in Q4/23 and $27M in 2024, enhancing HubSpot's CRM offerings with an extensive B2B contact database.
Higher target EV/FCF multiple: The price target increase to $610 also factors in a raised target EV/FCF multiple of 35x (from 34x), underpinning expectations of a recovery in core growth in the latter half of 2024.