HubSpot Pops 16% After-Market On Blowout Quarterly Profit

Shares of HubSpot spiked 16% in Thursday’s extended trading session after the customer management software company’s quarterly profit blew past the Street consensus.

Don't Miss our Black Friday Offers:

Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter

HubSpot (HUBS) posted earnings per share (EPS) of $0.44 during the fourth quarter, which came in almost double the $0.23 expected by analysts. Revenue increased 35% year-on-year to $252.1 million, topping analysts’ estimates of $236.7 million. HubSpot has a customer relationship management platform and provides software and support to customers across 120 countries.

During fiscal 2020, HubSpot’s revenue increased to $883.03 million from $674.86 million year-on-year. Earnings rose to $1.32 per share from $1.26 during the same comparative period.

In 2020, the platform’s subscription sales jumped 32% to $853 million and professional services and other revenue was up 5% to $30 million as compared to the previous year.

HubSpot’s customer base surged 42% to 103,994 in 2020. Meanwhile, total average subscription revenue per customer declined by 3% to $9,758 in 2020 as compared to the year-ago period.

HubSpot CEO Brian Halligan said that the company achieved two major milestones in 4Q: surpassing 100,000 total customers and crossing annual recurring revenue of $1 billion.

Looking ahead to fiscal 2021, HubSpot expects total revenue to land between $1.16 billion to $1.17 billion. Earnings are estimated to generate between $1.51 to $1.59 per share. (See HubSpot stock analysis on TipRanks)

On Feb. 9, Cowen & Co. Analyst Derrick Wood raised the stock’s price target from $360 to $400 (7.4% downside potential) but reiterated a Hold rating. Derrick noted that while digital marketing trends are encouraging and HubSpot’s evolving growth strategies are promising, the valuations are rather full. The stock has already yielded 131% over the past year.

The rest of the Street has a Strong Buy consensus rating on the stock. That’s based on 7 Buys versus 2 Holds. The average analyst price target of $439.13 implies 1.71% upside from current levels.