Guggenheim Starts Freshworks Inc (FRSH) at Buy
Guggenheim analyst Tamjid Chowdhury initiates coverage on Freshworks Inc (NASDAQ: FRSH) with a Buy rating and a price target of $25.00.
The analyst commented: "We are initiating coverage of Freshworks, Inc. (FRSH) with a Buy rating and a $25 price target, implying roughly 134% upside from the current share price. Shares of FRSH and other packaged application vendors have come under pressure since the beginning of 2026, driven primarily by the risk posed by AI. Specifically, AI could compress headcount, which is a headwind for seat-based businesses. We believe FRSH and the broader ITXM category are materially exposed to AI disruption, though the data at this early stage of adoption remains inconclusive. See note "AI: Still Early, But Not Too Early", July 1, 2026. FRSH positions AI monetization as central to its future relevance, but we do not believe the company is differentiated in its ability to materially realize that vision. That said, FRSH's strategic repositioning is more compelling. While the company's origins are in the SMB market, the company has shifted its focus towards the mid-market and small enterprise customers, and we believe it is taking the appropriate product and GTM steps to execute this pivot within Employee Experience. CEO Dennis Woodside's previous tenure on the ServiceNow board could be a relevant asset here, bringing enterprise GTM discipline and upmarket sales experience to the pivot. From a modeling standpoint, we view near-term estimates as achievable — if not beatable — and management's long-term targets do not require outsized new business growth to hit. FRSH trades at approximately 2.3x EV / NTM recurring revenue, which we believe is well below the intrinsic value of its future cash flow of 5.4x assuming it was run hyperefficiently and not growing (or declining). Current level implies that the company will decline by 15% in the terminal period, which we believe is unlikely. Considering these factors, we view the risk-reward as skewed favorably and rate the shares Buy."
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Shares of Freshworks Inc closed at $10.69 yesterday.