Morgan Stanley upgrades Klaviyo on growth beyond email marketing

Investing.com -- Morgan Stanley upgraded Klaviyo to overweight from equal-weight, saying the software company is evolving from an email marketing provider to its expansion into customer marketing tools, opening the door to longer-term growth and margin expansion.

The brokerage set a price target of $50, about 50% above current levels, and said the stock trades at a discount to peers despite consistent revenue beats.

Klaviyo has expanded into products including reviews, analytics, and customer service tools, which Morgan Stanley said could help the company address a market “as large as” its core marketing business. The firm estimated the service segment could generate about $1.3 billion in cumulative revenue through 2030.

The brokerage expects Klaviyo to sustain annual revenue growth of more than 20% over the next three years while gradually expanding margins as investments in product and sales begin to pay off. It sees free cash flow estimates for 2026 and 2027 running 5% and 8% ahead of Wall Street.

Morgan Stanley noted that Klaviyo shares trade at 0.27 times enterprise value to sales and growth, compared with small- and mid-cap software peers at 0.42 times. Despite delivering steady beats since 2025, Klaviyo’s multiple has compressed about 40% this year, it said.

The brokerage called the valuation “too cheap” for a company with Klaviyo’s profile, pointing to the potential for positive estimate revisions as management provides more detail on its long-term model at its first analyst day next week.

Morgan Stanley also highlighted the potential for operating margins of about 20% over time, underpinned by Klaviyo’s move toward a multi-product platform and pricing leverage across its customer base.

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