On Wednesday, Scotiabank analyst Nick Altmann upgraded Braze Inc (NASDAQ: BRZE) stock from Sector Perform to Sector Outperform and increased the price target to $56 from the previous $48.
Altmann highlighted the company's sustained growth, noting that Braze has consistently demonstrated robust performance across various metrics such as committed remaining performance obligations (cRPO), billings, revenue, and net revenue retention (NRR) over the last approximately four quarters.
Despite these strong indicators, Braze's shares have not seen significant multiple expansion, underperforming the iShares Expanded Tech-Software Sector ETF (IGV), with Braze shares down 22% compared to a 13% gain for the IGV. Altmann pointed out that Braze's shares have been largely unrewarded in the market.
The analyst's confidence is bolstered by recent conversations that underscore Braze's strategic positioning within marketing technology budgets, which Altmann believes will enable the company to maintain budget authority over the market.
Additionally, the company's potential for continued market share gains in a large and proven total addressable market (TAM) was noted, with the opportunity for consolidation seen as a TAM expander.
Scotiabank's outlook for Braze is positive, with expectations that the company's growth durability will continue over the medium term. The upgraded price target of $56 is based on approximately 12 times the enterprise value to calendar year 2025 estimated gross profit. This valuation represents a roughly 20% discount compared to Braze's hypergrowth peers, suggesting room for upward revaluation.
In other recent news, Braze Inc. has seen a series of significant developments. The company's recent shareholder meeting resulted in the election of three Class III directors and the approval of executive pay. The newly elected directors are William Magnuson, David Obstler, and Tara Walpert Levy.
Braze's first-quarter results showcased a robust 33% revenue growth to $135.5 million, outperforming the estimated 29%. This positive performance was accompanied by substantial non-GAAP operating margin improvements and strong cash flow from operations. The company also added 58 new customers, bringing the total to 2,102.
Analysts from TD Cowen, Canaccord Genuity, and Needham have maintained a positive stance on Braze. TD Cowen and Needham held their price targets at $52 and $70 respectively, while Canaccord Genuity raised its price target to $53.
Furthermore, Braze continues to make strategic investments in research and development, global expansion, and customer engagement innovation. These recent developments underscore Braze's commitment to long-term growth and efficiency. The guidance for the second quarter was slightly above expectations, with full-year revenue expected to fall between $577 million and $581 million.
InvestingPro Insights
Scotiabank's upgrade of Braze Inc (NASDAQ:BRZE) to Sector Outperform is supported by several metrics that reflect the company's financial health and market performance. With a market capitalization of approximately $3.85 billion and a high Price / Book multiple of 8.84, Braze demonstrates substantial investor confidence in its assets and future growth potential. The company's robust revenue growth is illustrated by a 33.12% increase in the last twelve months as of Q1 2025, indicating a strong upward trajectory in sales.
InvestingPro Tips reveal that Braze holds more cash than debt, which is a positive indicator of the company's financial stability. Additionally, the fact that 8 analysts have revised their earnings upwards for the upcoming period suggests an optimistic outlook on the company's performance. Notably, Braze's liquid assets exceed its short-term obligations, providing the company with a solid liquidity position to meet its immediate financial needs. For those interested in deeper insights, InvestingPro offers additional tips on Braze, which can be accessed at https://www.investing.com/pro/BRZE. Readers can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking further valuable analysis.
While analysts do not anticipate Braze to be profitable this year, the company's strategic positioning and market share gains may contribute to its long-term success. Investors looking to understand the full picture of Braze's potential can find an additional 6 InvestingPro Tips, which could provide a more comprehensive analysis of the company's prospects.
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