HubSpot's Lack Of China Risk, Execution Make Pacific Crest Buyers

• HubSpot Inc HUBS shares declined 18 percent over the past month, after having peaked at $55.03 on July 29.
• Pacific Crest’s Brendan Barnicle upgraded the rating for the company to Overweight, with a price target of $60.
• Following the recent pressure on the shares, Barnicle believes that the company’s stock appears more compelling.

Analyst Brendan Barnicle said that HubSpot’s valuation, following the recent sell-off, gave investors an opportunity to “own one of the highest-quality SaaS stocks.”

HubSpot has limited exposure to the currently weakening markets. It has no exposure to China or other emerging markets and limited exposure to manufacturing, industrials, commodities, energy or similar end markets.

“The company would not be immune to a broad global recession, but it is unlikely to feel a major impact, and would certainly be less affected than other companies,” Barnicle explained.

Although several investors seem to be “still just learning” about the company. Barnicle added that many investors who had considered HubSpot too expensive to purchase are now giving the stock “another look,” following the recent sell-off.

HubSpot is scheduled to host its annual user conference in Boston from September 8 to 11. “We expect the company to have some interesting new product announcements. It is likely that the company will continue to build off its core inbound marketing solutions, but also expand its successful CRM offerings,” the Pacific Crest report mentioned.

Channel checks in Q2 indicated that large enterprises that were using Salesforce.com are now also using HubSpot's new sales support product, Sidekick. “We believe that the company is continuing to execute very well, and we would be buyers,” Barnicle wrote.