On Thursday, TD Cowen adjusted its outlook for HubSpot Inc shares (NYSE:HUBS), reducing the price target to $680 from the previous $700, while still recommending the stock as a Buy. The adjustment comes after the company reported a 23% constant currency (cc) growth, surpassing the street's expectation of 19% cc.
The guidance for the second quarter was set at 18% cc, aligning with predictions, but the full-year 2024 forecast was increased by one percentage point to 19% cc.
Despite the positive growth figures, HubSpot management pointed out challenges in the current economic environment that are affecting net revenue retention (NRR), as well as unexpected temporary pressures stemming from the implementation of a new pricing model.
The analyst from TD Cowen believes that the pricing model issue is a short-term concern and anticipates a return to momentum in the second half of the year.
The revised stock price target reflects a slight decrease in confidence, potentially due to the aforementioned macroeconomic concerns and pricing model issues. Still, the overall positive growth trajectory and the raised forecast for the full year appear to have contributed to the decision to maintain the Buy rating for HubSpot's shares.
The firm's commentary highlighted that while HubSpot is navigating some temporary challenges, the long-term outlook remains positive. The expectation is that the company will overcome the short-term hurdles and continue to build on its growth in the latter part of the year.
Investors and market watchers will be keeping an eye on HubSpot's performance in the coming months, particularly in the second half of the year, to see if the company's efforts to address the current challenges will lead to the anticipated rebound in momentum.
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