HubSpot (HUBS) Receives Multiple Upgrades After Blowing Away Earnings and Revenue Estimates; Raymond James Raises PT by Almost 100%, Stock Up 20%

HubSpot (NYSE: HUBS) stock has exploded 20% in pre-open Friday after the company crushed analysts' expectations for its Q4 and raised guidance.

HUBS reported a loss of $15.4 million for its fourth quarter, which translates into a loss of $0.34 per share. On an adjusted basis, the company earned $0.40 per share to easily top the Street’s expectations of $0.23.

Revenue for the quarter came in at $252.1 million to surpass $236.4 million expected from the market analysts. For the current quarter, the company said it projects to generate revenues of between $260 million and $265 million.

"I am exceptionally proud of how the HubSpot team closed out the year in 2020," said Brian Halligan, CEO of HubSpot.

"During the quarter we surpassed 100,000 total customers, and in December we crossed $1 billion in annual recurring revenue -- two great milestones that reflect the determination of our team and the strength of our customer relationships."

For the full-year, HUBS is expecting to earn between $1.51 per share to $1.59 per share on sales ranging from $1.16 billion to $1.17 billion.

Mizuho’s Siti Panigrahi upgraded the stock from “Neutral” to “Buy” and raised the price target to $525.00 per share from the prior $360.00.

“While we have been positive about HUBS' long-term opportunity as a leading CRM platform for SMBs, we were concerned about near-term growth due to subscription downgrades and discounts/promotions following the onset of pandemic. However, 35% growth in Q4 with guidance of 32% growth in 2021 against 30% growth in 2020, and coupled with re-expansion of ASRPC, has alleviated our concern. We strongly believe that HubSpot is a significant beneficiary of an accelerated digital transformation trend, and is executing to its product expansion strategy, which should help drive long-term sustainable growth and margin expansion,” Panigrahi wrote in a research note today.

Raymond James analyst Brian Peterson looks even more impressed as he upgraded HUBS to a “Strong Buy” rating from “Outperform”. He also hiked the price objective by almost 100% to $725.00 per share (from the old $365.00).

“We're upgrading shares of HubSpot from Outperform to Strong Buy following impressive 4Q20 results and an above consensus outlook for 2021, which suggests 30%+ growth should continue for the foreseeable future. While we're not typically fans of reactionary rating changes (shares up ~15% after hours), we simply can't ignore our confidence in HubSpot's product portfolio and market opportunity to modernize B2B selling motions, which should experience significant investments over the next decade.

“While HubSpot has long been a major player in the Marketing space, our checks also indicate that product synergies with the rest of the "Hubs" has accelerated, creating multiple vectors for revenue per customer growth. Even after the ~15% move after hours, shares still trade at only 17x our CY22 estimate, a substantial discount to the 30%+ growth group at 33x. Look for that gap to close in short order,” the analyst wrote in a note sent to clients.

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