Investing.com -- Barclays upgraded HubSpot (NYSE:HUBS) to “Overweight” from “Equal Weight” and set a price target of $815 given company’s ability to capitalize on AI-driven monetization and pricing changes to accelerate growth.
Brokerage had a neutral stance earlier on concerns about limited expansion opportunities within HubSpot’s small and medium-sized business customer base. But it now sees AI as a key driver of additional spending, particularly through usage-based pricing.
HubSpot’s net revenue retention (NRR) to trend back toward 110% as AI, pricing tailwinds, and expansion into larger customers help push revenue growth into the mid-20% range over multiple years.
HubSpot’s platform approach—combining a unified system of record, AI-powered features, and emerging product hubs—positions it well against competitors, Barclays (LON:BARC) said. The firm expects more details on AI utilization at HubSpot’s Spotlight Live event on April 10.
With AI adoption is scaling rapidly, HubSpot has 900,000 AI agent users as of Q4 2024, up from 50,000 in September banking on long-term monetization potential as businesses increasingly use HubSpot as a central platform for AI-powered automation.
Barclays also noted improving traction with larger customers. A shift away from lifetime commissions on small accounts has incentivized partners to focus on larger deals, with one estimating a 40-50% increase in average contract size. However, the firm said HubSpot still has work to do in areas like data management and privacy for enterprise clients.
Barclays values HubSpot at 12 times its estimated 2026 sales of $3.5 billion, a premium to the peer group average of 8 times, citing the company’s “right to win” in AI-powered SMB solutions and pricing tailwinds.
“We believe gen AI unlocks additional wallet-spend for HubSpot as AI credit-based monetization allows HUBS to capture more value from power users,” analyst at Barclays said.