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On Oct 3, we issued an updated research report on Cambridge, MA based HubSpot Inc. (HUBS - Free Report) , a provider of inbound marketing and sales applications over the cloud.

The company’s products namely, HubSpot Marketing, HubSpot CRM and HubSpot Sales, together referred to as HubSpot growth stack are gaining rapid adoption. This is evident from the 37.1% year-over-year increase in the company’s top line in second-quarter 2017.

HubSpot’s bottom line also witnessed a significant improvement. In the last reported quarter, the company posted adjusted profit of 7 cents per share against a loss of 7 cents per share in the year-ago quarter.

Notably, most recently the company announced positive revisions to its third-quarter 2017 guidance. Management now expects total revenue for the soon-to-be reported quarter to be within $95.9 million to $96.9 million, up from the previously guided range of $92.8 million to $93.8 million.

Non-GAAP operating loss for the quarter is expected to be in the range of $1.2–$2.2 million. The revised projection is much better than management’s previous outlook of a loss of $3.5 million-$4.5 million. Non-GAAP net loss per share is now expected between 2 cents and 4 cents compared with a loss of 8 cents to 10 cents per share expected previously.

We believe that better-than-expected second-quarter results and improved expectations for the third quarter have boosted shares. HubSpot stock has gained 79.6% year to date, substantially outperforming the 19.1% rally of the industry it belongs to.

Key Growth Catalysts

HubSpot’s customer base increased 40% year over year to 34,326 in the last reported quarter. Accelerated adoption of Hubspot’s flagship product, One Hubspot and launch of a few other freemium products as complementary addition to the company’s core paid sales and marketing products have aided the top line.

Most recently, the company upgraded the professional tier of its Sales Hub solutions suite with features including automation and prediction-based lead scoring. These add-ons are expected to make the product further lucrative, thereby increasing the probability of customer acquisition.

The share price momentum is expected to continue as HubSpot will benefit from the One HubSpot initiative, cross-selling opportunities, growing marketing agency network and expanding international footprint. The company’s recent vertical acquisition of chatbot builder Motion AI reflects the company’s focus on involving the positives of artificial intelligence (AI) in its offerings as well as its intention to expand the solutions portfolio.

We believe that with an expanding consumer base and a well-adopted product suite, HubSpot is poised to deliver even better performance going ahead. The company’s partnerships with Brightcove (BCOV - Free Report) , Sales Force Europe (SFE) and Qstream have also boosted its marketing expertise, which is likely to aid the company’s results going ahead.

Zacks Rank and Key Pick

HubSpot currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Better-ranked stocks in the industry are Applied Materials, Inc. (AMAT - Free Report) and Guidewire Software, Inc. (GWRE - Free Report) , both sporting a Zacks Rank #1.

Long-term earnings growth rate for Applied Materials and Symantec is projected to be 17.1% and 20.0%, respectively.

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