Analyst Ygal Arounian of Citi maintained a Buy rating on Squarespace (SQSP – Research Report), boosting the price target to $42.00.
Ygal Arounian has given his Buy rating due to a combination of factors surrounding Squarespace’s financial performance and growth prospects. He highlights the company’s recent performance which exceeded expectations, alongside a forecast of free cash flow that is projected to be strong. Arounian also believes that the revenue guidance for fiscal year 2024 provided by Squarespace seems understated, suggesting a solid foundation for future growth. He points to the potential for pricing opportunities, the integration of Squarespace Payments, and the cross-sell synergies with Google Domains as key drivers for revenue growth extending into 2025. Additionally, Arounian notes the company’s commitment to improving profit margins, reinforcing the attractiveness of the stock.
Further bolstering the recommendation, Arounian observes that the company’s core growth drivers remain robust, and anticipates that further long-term targets may be revealed during an upcoming investor day. The valuation of the company, at 18.3 times the estimated 2025 enterprise value to unlevered free cash flow, is considered appealing. He consequently raised the target price for Squarespace to $42, up from $40, reflecting higher estimates for unlevered free cash flow and an optimistic outlook on profitability. This target price suggests a substantial potential return based on the company’s expected performance, which supports Arounian’s Buy rating for Squarespace’s stock.
In another report released today, JMP Securities also reiterated a Buy rating on the stock with a $40.00 price target.
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Squarespace (SQSP) Company Description:
Squarespace Inc is an all-in-one platform for businesses and independent creators to build an online presence, grow their brands and manage their businesses across the internet. It offers websites, domains, e-commerce, tools for managing a social media presence, marketing tools, and scheduling capabilities. The company primarily derives revenue from monthly and annual subscriptions. Revenue is also derived from non-subscription services including fixed fees earned on revenue share arrangements with third parties and fixed transaction fees that it earns on sales made through customers’ websites.
Read More on SQSP:
- Squarespace announces $500M share repurchase program
- Squarespace sees FY24 revenue $1.17B-$1.19B, consensus $1.17B
- Squarespace sees Q1 revenue $274M-$277M, consensus $271.84M
- Squarespace reports Q4 EPS 4c, consensus 14c
- Squarespace Announces Fourth Quarter and Full Year 2023 Financial Results and $500 Million Share Repurchase Authorization
