HubSpot Stock Has Never Looked So Good

There’ll be more than a few HubSpot (NYSE: HUBS) investors chomping at the bit for markets to open again on Tuesday, having been closed on Monday for Presidents Day. The company’s Q4 earnings were released after Thursday’s session closed, and finished up 16% on Friday. Investors will have had a few days since to chew on the numbers before shares resume trading tomorrow and there’s every reason to think the bid will be just as strong.

That’s because those Q4’s numbers look good, very good. Revenue was up 35% on the year and played a big role in the bottom line EPS numbers smashing analysts’ expectations too. Adjusted operating margin was also a shining star and was more than 50% higher than the consensus. Full-year revenue and EPS guidance came in bullish, ahead of what analysts were expecting, and should do much to send shares higher in the coming shortened week.

HubSpot CEO Brian Halligan summed the quarter up well when he said "I am exceptionally proud of how the HubSpot team closed out the year in 2020. 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."

Strong Potential

It was a solid quarter and a great way to close out a year that has been the makings of the company. Before COVID, shares were hovering around the $175 mark and well below their 2019 all-time highs. Since the lows of last March they’ve undergone a tremendous rally and have managed to tack on more than 450%. Every indication suggests that this rally is here to stay.

Management’s recent $27 million acquisition of business newsletter “The Hustle” and last year’s release of a content management product show just how focused they are on product rollouts and how nimble they can be. Rather than sitting back on their laurels and enjoying another year of 30% growth, they’re still getting after it and making sure HubSpot has as many revenue-generating strings in the bow as possible.

It also allows the company to position itself as the king of digital marketing, as its 4 core products encompass marketing, sales, services, and content. They’re not competing directly against the likes of Salesforce (NYSE: CRM) but instead have carved out a niche for themselves as a much more user-friendly CRM that can do a ton of other things too.

Fresh Upgrade

Mizuho didn’t wait around long and came out with an upgrade on Friday, moving shares from a Neutral rating to a Buy. They also upped their price target to $565, suggesting upside of some 15% from Friday’s closing price. Analyst Siti Panigrahi is particularly bullish on the company’s long-term prospects as HubSpot cements its position as a leading CRM platform. Thursday’s numbers removed any worries the firm had had about potential pains in its SMB client base, as those are the most exposed to COVID.

But with double-digit percentage growth on the year and raised forecasts, Panigrahi now sees HubSpot as a "significant beneficiary of an accelerated digital transformation trend," with long-term sustainable growth and margin expansion very achievable.

Wall Street clearly likes what they’re seeing and based on Friday’s jump it looks like investors are too.