HashiCorp Likely To Become Anchor Vendor Across Infrastructure And Security Aided By Multi-Cloud Adoption, Analyst Says - HashiCorp (NASDAQ:HCP)

Needham analyst Alex Henderson upgrades HashiCorp Inc HCP from Hold to Buy with a $39 price target.
Henderson thinks Street estimates for 28% growth in CY23 are conservative, setting HCP up for continued beat and raise quarters in a challenging environment.
He thinks HCP has many ways to produce upside to forecasts. Even as new logos slow, HashiCorp has shown less pronounced headwinds to new business, maintaining NRR >134% for three consecutive quarters and exiting CY3Q with a record pipeline.
Time to conversion from open-source to paid customer will likely shorten as new reps mature over FY24, which could help to offset macro pressures.
Henderson thinks HCP could have benefited from any semblance of budget flush in 4QFY23 and will likely post a strong beat and guide for FY24.
The analyst thinks HCP's valuation has neared trough levels making for an attractive entry point.
Margin leverage exiting HCPs investment cycle puts it on track to exceed goals for break-even in 2HFY26 with a projected $2 billion ARR longer-term.
Despite macro, Enterprise transitions to Cloud continue unabated, driving adoption of HCP's technologies and increased customer demand for multi-year, strategic deals.
Thus, Henderson foresees HCP becoming an anchor vendor across infrastructure and security.
The analyst notes that HCP is a new, misunderstood story set to benefit from a prolonged period of multi-cloud adoption and optimized cloud growth.
Henderson is a buyer of HCP's long-term vision and multi-product ubiquity, with confidence in management's ability to execute.
HashiCorp's proprietary configuration language (HCL) saw significant growth over CY22, expanding faster than all other software programming languages, according to GitHub.
HCL grew usage by 56% in 2022, topping other popular languages like Rust, Go, and Python. This strength came from Terraform's accelerating awareness and widespread standardization in Infrastructure as Code, which is seeing robust traction as automated, multi-cloud deployments grow.
Price Action: HCP shares traded higher by 2.53% at $32.45 on the last check Monday.

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