Derick Hudson
HubSpot (NYSE:HUBS) had its Buy rating reiterated on Thursday by Bank of America after its stock price plunged 12% on Wednesday over news that Alphabet (GOOG)(GOOGL) decided against acquiring the company.
“The stock is now trading at a level consistent with the after-hours price following the disappointing revenue outlook on the May 8th Q1 earnings call before reports of acquisition talks resurfaced the next morning,” said BofA analysts Brad Sills and Carly Liu, in a note. “In other words, the takeout premium is now out of the stock, thus removing the potential negative overhang.”
HubSpot rebounded 3% during early market action on Thursday.
BofA set a hefty price objective of $690 on the stock.
HubSpot has a large total addressable market of 5M small and medium-sized businesses in the US alone for its customer relations management software. This could provide a long runway for 20% growth, according to BofA.
HubSpot also stands to benefit from its artificial intelligence offerings.
“The opportunity for AI-enabled automation is most compelling in the front office/CRM application category, given the promise of sales automation that can translate to revenue uplift,” Sills said. “This is even more relevant in the small business segment, which should be more reliant on software vendors to provide AI automation.”
HubSpot has a Buy rating from both Seeking Alpha and Wall Street analysts. However, Seeking Alpha’s Quant system, which routinely beats the market, rates it a Hold.