Investing.com-- TD Cowen downgraded its rating on HubSpot Inc (NYSE:HUBS), stating that shares were set for a slower pace of growth after a strong rally through 2024, while spending on marketing technology is also expected to lessen.
But the brokerage hiked its price target on HUBS, stating that its fourth quarter earnings were still likely to beat expectations.
TD downgraded HUBS to Hold from Buy, and raised its PT on the stock to $725.0 from $680.0- representing an upside of 1% from current levels. The stock rose 20% in 2024.
TD said its recent survey suggested that spending on marketing software was becoming a lower priority- a trend that is expected to persist in 2025. This heralds more constrains on HUBS’ revenue streams.
The brokerage also noted some disruptions in HUBS’ partner ecosystem- particularly from changes to assigned resources from HUBS’ account managers, confusion around its seat-based licensing model, and fluctuations in prices- which may have a material impact on partners in 2025.
This trend is pushing some partners towards HUBS competitors, such as Monday .Com Ltd (NASDAQ:MNDY) and Klaviyo Inc (NYSE:KVYO).
TD expects 2025 to be a testing year for HUBS, amid ongoing changes in its ecosystem and broader business.
HUBS develops enterprise software products used in a variety of applications, ranging from marketing to customer support. The company benefited from a boom in increased capital expenditure, especially in artificial intelligence, over the past two years.