On Friday, Piper Sandler maintained its Overweight rating on shares of Braze Inc (NASDAQ:BRZE) with a steady price target of $51.00. The firm's stance comes with an optimistic view on the company's growth trajectory, despite acknowledging that subscription growth rates are anticipated to normalize at 20% in the second half of the year, a figure that is modest compared to the more ambitious 25-30% growth expectations held by some investors.
Piper Sandler expressed satisfaction with Braze's accelerated path to profitability, which occurred six months earlier than anticipated. This development, along with the belief in the company's ability to sustain further leverage next year, underpins the firm's positive outlook.
The analyst highlighted the significance of contract expansions with some of Braze's largest customers, which include deals valued over $10 million. These expansions are seen as evidence of Braze's distinct product offerings in the enterprise sector and present a multi-year vendor consolidation opportunity that could maintain a subscription growth rate above 20%.
The firm's analysis suggests that Braze's growth is not only robust but also superior to the broader industry, with the software as a service (SaaS) sector growing at 13% and the general software industry at 11%. This comparison underscores Braze's competitive position in the market.
The endorsement of Braze's stock comes with an emphasis on the company's potential for share gains. Piper Sandler recommends investors to consider adding to their positions in Braze during market pullbacks, signaling confidence in the company's performance and future prospects.
In summary, Piper Sandler's reiteration of an Overweight rating and a $51 price target for Braze Inc reflects a strong belief in the company's ability to outpace industry growth rates and achieve sustained profitability and subscription growth.
In other recent news, Braze, Inc. has been demonstrating strong financial performance, with its first-ever positive Non-GAAP operating income and a 26.4% year-on-year revenue increase to $145.5 million. The company's adjusted earnings per share for the second quarter were $0.09, exceeding the projected loss of $0.03. Braze's revenue guidance for the third quarter aligns with market expectations, projecting a 19% year-on-year increase.
The company has also secured its second and third eight-figure contracts, indicating potential for further expansion within its customer base. Despite a sequential drop in committed remaining performance obligations (cRPO) growth, Braze's net customer additions remained consistent with recent quarters.
Analysts from Needham, Barclays (LON:BARC), Goldman Sachs (NYSE:GS), Canaccord Genuity, and DA Davidson have maintained their positive ratings on Braze, highlighting the company's growth potential and financial health. These recent developments underscore Braze's resilience and potential to continue its growth trajectory.
InvestingPro Insights
As Piper Sandler maintains an optimistic stance on Braze Inc (NASDAQ:BRZE), real-time data from InvestingPro provides additional context to the company's financial health and market performance. Braze holds more cash than debt, a reassuring sign of financial stability (InvestingPro Tip). The company's liquid assets exceed its short-term obligations, indicating good liquidity management (InvestingPro Tip). These factors could contribute to the company's ability to sustain leverage and profitability as highlighted by the analyst.
InvestingPro Data shows a market capitalization of approximately $4.48 billion USD, underscoring the company's substantial presence in the market. Despite not being profitable over the last twelve months, Braze has demonstrated impressive revenue growth of 31.12% during the same period.
This growth is significant when considering the SaaS sector's 13% and the general software industry's 11% growth rates, aligning with Piper Sandler's assessment of Braze's robust growth. Moreover, the company has experienced a strong return over the last three months, with a 19.98% price total return, which may interest investors looking for recent positive performance trends.
For investors seeking a deeper dive into Braze's metrics and future outlook, InvestingPro offers numerous additional tips to guide investment decisions, accessible through the platform's extensive database. This wealth of information can be particularly valuable when considering Piper Sandler's recommendation to capitalize on market pullbacks to add to positions in Braze.
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