On Monday, Barclays (LON:BARC) updated its outlook on Squarespace (NYSE: SQSP), raising the price target on the company's shares to $47.00 from the previous $44.00. The firm maintained its Equalweight rating on the stock.
The adjustment comes amid a market environment described as volatile, with peers in the sector also experiencing weakness.
The analyst from Barclays stated that the approximately 6% increase in the price target might not satisfy arbitrageurs, but given the lack of push from fundamental investors for a higher offer, the revised proposal is seen as the best achievable outcome for this deal.
The new offer has been structured as a tender to eliminate the uncertainty associated with voting, which the analyst believes underscores the strength of the deal in the current market conditions. The firm's stance remains at an Equalweight rating, with the price target now set at $47.
Squarespace, which is listed on the New York Stock Exchange, has been the subject of financial analysis as it navigates through a challenging trading landscape that has affected similar companies in the sector. The updated price target reflects Barclays' latest assessment of the company's value in light of these market dynamics.
In other recent news, Squarespace has been the center of several noteworthy developments. The company's shareholders are set to receive $46.50 per share in cash from the global investment firm Permira, in an amended acquisition agreement valuing the transaction at approximately $7.2 billion.
This revised offer is a 5.7% increase from the earlier agreed price. Squarespace's Q1 2024 financial results exceeded expectations, with revenue and unlevered free cash flow surpassing the high end of guidance. This success followed the acquisition of Google (NASDAQ:GOOGL) Domains, which drove subscription growth for the fourth consecutive quarter.
Furthermore, Squarespace sold its subsidiary, Tock LLC, to American Express (NYSE:AXP) Travel Related Services Company, Inc. for $400 million, marking a significant cash infusion for the company. Analyst feedback on these developments has varied.
B.Riley downgraded Squarespace's stock from Buy to Neutral following the announcement of the all-cash acquisition proposal from Permira, while Mizuho upgraded Squarespace from Neutral to Buy, citing key growth drivers that are currently undervalued by the market.
Piper Sandler maintained a neutral stance on Squarespace stock, addressing investor concerns and evaluating the fairness of the offer price in light of Squarespace's projected value.
InvestingPro Insights
Barclays' revised price target for Squarespace aligns closely with recent market activity. According to InvestingPro data, Squarespace's market cap stands at approximately $6.4 billion, and the company has experienced an impressive revenue growth of 18.76% over the last twelve months as of Q2 2024. This growth is slightly higher than the quarterly figure of 19.89%, suggesting a consistent upward trajectory in the company's revenue. Moreover, Squarespace has maintained a robust gross profit margin of 74.21%, reflecting its strong ability to control costs relative to its revenue.
InvestingPro Tips highlight that while Squarespace is expected to turn a profit this year, analysts have revised their earnings downward for the upcoming period. Additionally, the company is trading near its 52-week high and has seen a significant price uptick over the last six months, with a total return of 43.86%. This suggests that the market is optimistic about the company's prospects, despite the challenges faced within the sector.
For those looking to delve deeper into Squarespace's financials and future outlook, InvestingPro offers a comprehensive set of additional tips, with 12 more insights available to help investors make informed decisions. The platform's fair value estimate stands at $46.31, which is slightly above the current price, indicating potential room for growth.
As Squarespace continues to navigate the volatile market, these insights from InvestingPro could prove valuable for investors considering the company's stock. For more detailed analysis and tips, investors can visit https://www.investing.com/pro/SQSP.
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