HubSpot's initial fiscal 2023 operating margin outlook disappointed some investors, leading to a sell-off in the maker of web marketing software. But some analysts are still upbeat on the long-term outlook for HUBS stock amid investments in payments technology, and shares moved up Thursday.
The company predicted 2023 operating margin of 8%. That's roughly flat with this year and below analyst estimates of 9%-plus for next year. HubSpot's forecast came as it hosted an analyst day Wednesday in Boston as part of its annual Inbound customer conference.
Shares fell 6% Wednesday on management's disappointing margin outlook. But HUBS stock pared some of those losses on the stock market today, and climbed 3.9% to close at 303.56.
"While the early look into 2023 margins wasn't what we had hoped for, we came away feeling even better about the durability of growth," RBC Capital analyst Rishi Jaluria said in a note to clients.
HUBS Stock: Payments To Kick In By 2024?
Jaluria noted that HubSpot doesn't expect its new payments technology to contribute significantly to 2023 revenue. But it could impact sales in 2024.
"HubSpot continues to be iterating on top of payments more quickly than prior major product launches," he added.
Cambridge, Mass.-based HubSpot focuses on digital channels such as blogs, internet search engines and social media. The company aims to attract people to customer websites and optimize content in order to convert visitors into paying customers.
"HubSpot's continued pace of investment makes sense to us in the context of its large total addressable market," Goldman Sachs analyst Gabriella Borges said in a note.
HubSpot Long-Term Vision
HubSpot holds a Relative Strength Rating of only 12 out of a best possible 99. Further, HUBS stock has retreated 55% in 2022.
"While we understand the frustration over lack of margin leverage, we think organically building new capabilities (payments/commerce) and adding sales capacity to push upmarket is the right long-term decision," Cowen analyst Derrick Wood said in a note.
He added: "We like the long-term vision of weaving business-to-business commerce capabilities into its premium editions of its core apps."
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