J.P. Morgan Believes HUBS Won’t Stop Here

By Austin Angelo

J.P. Morgan analyst Mark Murphy reiterated a Buy rating on HubSpot (NYSE: HUBS) today and set a price target of $63. The company’s shares opened today at $54.90, close to its 52-week high of $60.11.

Murphy wrote:

“Consistent with our recent upgrade, HubSpot executed well through a potentially challenging period with almost all metrics coming in ahead of consensus. Revenue came in about 4% ahead of consensus, while PF EPS was 8c better than expected. Billings grew 48% or 43% y/y adjusting for a tailwind from a sales promotion as well as FX, against the toughest comp of the year, and ahead of consensus of mid/high 30s% y/y growth. While HubSpot referred to continued strength in its core Marketing products as evidenced by 29% y/y growth in the customer count metric, it also alluded to growing strength in its newer Sales product, which now has more than 5k customers, within one year of its release. Management also referred to an increasing base of customers who are starting to use the full stack, which is expected to further improve revenue retention rates, currently in the high 90s%. As such, HubSpot plans to enable its entire sales force as well as its >3,500 agency partners to sell its entire portfolio of products starting in January, which could translate into incremental growth opportunity. Finally, HubSpot also guided Q4 revenue and PF EPS above consensus and alluded to mid-30s% billings growth for Q4, which we think is a conservative outlook.”

According to TipRanks.com, Murphy is a 5-star analyst with an average return of 10.5% and a 69.4% success rate. Murphy covers the Technology sector, focusing on stocks such as Nuance Communications, Cornerstone Ondemand, and Coupa Software Inc.

HubSpot has an analyst consensus of Strong Buy, with a price target consensus of $64.50.

Based on HubSpot’s latest earnings report from June 30, the company posted quarterly revenue of $64.97M and quarterly net profit of -$11.06M. In comparison, last year the company earned revenue of $47.71M and had a net profit of -$13.55M.

Based on the recent corporate insider activity of 143 insiders, corporate insider sentiment is neutral on the stock. Most recently, in May 2016, David Skok, a Director at HUBS sold 11,005 shares for a total of $501,643.

HubSpot, Inc. provides cloud-based marketing and sales software platform that enables businesses to deliver an inbound experience. Its software platform features integrated applications to help businesses to convert visitors into leads, close leads into customers and delight customers to become promoters of those businesses. These integrated applications include social media, search engine optimization, blogging, website content management, marketing automation, email, analytics and reporting. The company’s platform uses its centralized inbound database to empower businesses to create more personalized interactions with customers, such as personalized emails, personalized social media alerts, personalized websites and targeted alerts for sales people. HubSpot was founded by Brian Halligan and Dharmesh Shah on April 4, 2005 and is headquartered in Cambridge, MA.