While many growth-oriented stocks have found 2021 hard going, the same cannot be said of HubSpot (HUBS). The CRM and inbound marketing specialist has continued its rise, with the stock notching year-to-date gains of 31%. Ahead of the company’s Q1 earnings (Wednesday, May 5 AMC), Guggenheim’s Kenneth Wong believes investors’ expectations are high.
“We believe investor sentiment is extremely positive, which typically equates to a tough setup into the print,” the 5-star analyst said. “Yet, we expect HUBS to significantly exceed consensus revenue expectations ($264M / 33% y/y) with potential to deliver growth closer to investor targets of high-30% (with some projecting 40%). Our industry checks were very upbeat with all partners indicating growth trends that exceeded robust 4Q demand dynamics.”
These industry checks lead Wong to expect HUBS will deliver revenue “closer to $275 million+,” an estimate that reflects investor expectations. Likewise in billings, Wong says investors also forecast better-than-expected results, boosted by “higher Pro/Enterprise mix.”
According to further industry contacts, the current narrative suggesting businesses are pivoting workflows to the digital realm has been validated by the “outsized demand.”
“Partners consistently highlighted 1Q growth that accelerated from 4Q with extremely strong new customer acquisition, more ‘all-in’ buying, and growing interest from larger customers,” Wong noted. Accordingly, another tailwind is expected from customers’ “elevated interest” in purchasing multiple Hubs and suites.
Compared to the previous 3 quarters, at a 30% year-over-year increase, HUBS’ website traffic volume has remained “relatively steady,” barring a March decline which has coincided with harder post-pandemic comps.
Looking ahead, following an “exceptional” FY20, Wong says investors are looking forward to a robust outlook from the company.
“The majority of our recent conversations suggest investors are looking for high-30% growth (~$1.20-1.22B) with a handful optimistic that 40% is a realistic possibility,” the analyst summed up.
All in all, Wong reiterated a Buy rating on HUBS stock, backed by a $600 price target. The implication for investors? Upside of 15%. (To watch Wong’s track record, click here)
The positive investor sentiment is mirrored by the Street’s rosy outlook. 19 HUBS reviews have been posted over the last 3 months, breaking down to 17 Buys vs. 2 Holds, all culminating in a Strong Buy consensus rating. The forecast is for additional one-year upside of 9%, considering the average price target comes in at $568.88. (See HubSpot stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
