Reviewed by Gotrade Internal Analyst
HubSpot, Inc. (NYSE: HUBS) has fallen nearly 20% post-earnings despite delivering another beat-and-raise quarter.
Q3 revenue rose 21% YoY to $809.5M, marking two consecutive quarters of acceleration, while billings grew 18% YoY (19% FX-neutral). Operating margin expanded to 19.9%, maintaining a Rule of 40 score of 41.
Management raised FY25 guidance to $3.113–3.115B (+19% YoY) revenue, $580M FCF (18.6% margin), and $9.60–$9.62 EPS.
For FY26, consensus expects $3.59B revenue (+16%) and $11.44 EPS. Assuming a 100bps improvement in FCF margin to ~19.6%, HubSpot could generate ~$704M FCF (+21% YoY).
At current prices (~$395), HUBS trades at 5.9x EV/FY25 revenue, 5.1x FY26, 31.9x EV/FY25 FCF, and 26.3x FY26 FCF — a sharp de-rating that now positions HubSpot as a high-quality software name trading at value multiples.
- Current Price: ~$395
- Healthy Accumulation Zone: $355 – $330 (historical demand area, anchored near $335 support)
- Key Support: $335 → invalidation below $320 (weekly close)
- Resistance/Targets: $495, $675
Technically, HUBS has pulled back to a multi-month range. The base structure remains intact — a likely scenario involves a retest of the $335–$330 buy zone before a rebound toward $495, then $675 if market sentiment normalizes.
Technical Analysis
- Current Price: ~$395
- Healthy Accumulation Zone: $355 – $330 (historical demand area, anchored near $335 support)
- Key Support: $335 → invalidation below $320 (weekly close)
- Resistance/Targets: $495, $675
Technically, HUBS has pulled back to a multi-month range. The base structure remains intact — a likely scenario involves a retest of the $335–$330 buy zone before a rebound toward $495, then $675 if market sentiment normalizes.
Trading Setup
- Accumulation Plan (DCA):
- 50% at $355–345
- 30% at $345–335
- 20% at $330–320 (extreme discount bids)
- Stop Loss: weekly close < $320
- Take Profit (TP):
- TP1: $495
- TP2: $675
- Risk/Reward Example: Entry ~$345, risk $25 (to $320), reward $150 (to $495) = 6R
Optional income play: Sell cash-secured puts $330–320 (30–60DTE) to enter at discount; post-assignment, sell covered calls at $495 for extra yield.
Growth Thesis: Why the Market Is Overreacting
- Still accelerating growth. Two straight quarters of reacceleration — Q3 +21%, billings +19% FX-neutral — suggest FY26’s +16% consensus may be too conservative.
- Platform-first momentum. Multi-hub adoption keeps rising: 43% of Pro+ base uses 3 core hubs, 39% use 4+ hubs. Larger deals (>$5K MRR) up 35% YoY, showing success in the upmarket push.
- Strong unit economics. Operating margin at 19.9% (+120bps YoY) with Rule of 40 >40; few SaaS firms sustain this balance.
- Balance sheet strength. Net cash position offers flexibility for R&D, M&A, or GTM expansion while providing downside cushion.
- AI “threat” narrative overstated. Enterprises are consolidating tech stacks on HubSpot for lower TCO, unified customer view, and integrated AI workflows — making HubSpot part of, not a victim of, AI transformation.
Valuation & Risks
- Attractive de-rating:
- EV/Rev: 5.9x FY25 → 5.1x FY26
- EV/FCF: 31.9x → 26.3x
- P/E: 39.3x → 32.9x
- Comparatively, legacy enterprise peers growing single digits still trade at richer multiples.
Key Risks:
- Potential growth deceleration into mid-teens by FY26
- Competitive pressure from Salesforce, Microsoft, or AI-native entrants
- Multiple compression if margin expansion stalls
- Macroeconomic headwinds delaying IT spending or deal expansion
Conclusion
HubSpot’s fundamentals remain strong — ~20% growth, accelerating billings, expanding margins, and robust FCF — yet the stock has been punished excessively.
At these levels, HUBS offers a rare mix of recurring revenue, operating leverage, and valuation safety in the SaaS sector.
✅ BUY on dip.
Accumulate between $355–330, target $495 / $675, cut below $320 weekly.
This is a high-conviction setup for 12–24 month outperformance once sentiment stabilizes.
Disclaimer
Gotrade is the trading name of Gotrade Securities Inc., registered with and supervised by the Labuan Financial Services Authority (LFSA). This content is for educational purposes only and does not constitute financial advice. Always do your own research (DYOR) before investing.
