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HubSpot Inc (NYSE:HUBS) shares are trading higher on continued upward momentum following a report suggesting Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) is in talks with advisors about a potential offer for the company.
Piper Sandler analyst Brent Bracelin maintained HubSpot shares as Overweight with a $675 price target.
Bracelin has long noted that IaaS could be natural consolidators of a highly fragmented SaaS landscape.
The transition from traditional client-server applications to cloud computing models over the past 20+ years has created a proliferation of SaaS applications that today include 100+ publics and 1,000+ privates, Bracelin said. Private equity firms such as Thoma Bravo and Vista Equity Partners have been the most prolific consolidators of the SaaS ecosystem over the past three to five years.
The analyst flagged Microsoft Corp (NASDAQ:MSFT) and Oracle Corp (NYSE:ORCL) as the only two cloud platforms operating over $10 billion IaaS platforms alongside over $10 billion SaaS application suites.
Bracelin argued that Amazon.com Inc (NASDAQ:AMZN) and Alphabet could move higher up the stack into SaaS applications.
HubSpot was a SaaS pioneer that has expanded revenue to plus $2 billion since it was founded in 2006, he said.
The analyst believed the combination of Google Workspace and the HubSpot Customer Platform makes strategic sense. HubSpot has 205K paid customers, with an average size of 25 employees per customer, while Google Workspace has 9 million paid customers. Bracelin said the potential cross-sell of HubSpot SaaS applications into a large Google Workspace installed base could be compelling.
According to Gartner, HubSpot has captured a small slice of the $22 billion CRM marketing software industry with just a 4.9% market share in 2022. The two most prominent platforms in CRM marketing include Salesforce Inc (NYSE:CRM) (15% share) and Adobe Inc (NASDAQ:ADBE) (15% share).
Canaccord Genuity analyst Richard Davis maintained HubSpot with a Buy and raised the price target from $700 to $750.
HubSpot stock gained 67% in the past 12 months. Investors can gain exposure to the stock via Sterling Capital Focus Equity ETF (NYSE:LCG) and Spear Alpha ETF (NASDAQ:SPRX).
HUBS Price Action: HubSpot shares are trading higher by 4.32% to $677.19 on the last check Friday.
Also Read: HubSpot Analysts Increase Their Forecasts Following Upbeat Results
Photo: Courtesy of HubSpot
