HUBS
HubSpot, Inc.
$207.48
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Undervalued
Trading 57.8% below fair value
You pay
$207.48
Bear
$240.06
Fair
$491.69
Bull
$804.69
Bear
$240.06
+15.7%
15% rev growth, 21% terminal margin
Fair
$491.69
+137.0%
26% rev growth, 28% terminal margin
Bull
$804.69
+287.8%
33% rev growth, 32% terminal margin
Key Value Driver
Revenue growth (26%) × margin expansion to 28%
Terminal Value % of EV
58%
Implied Market Multiple
2.9x
Summary
Our base-case estimate uses a discounted cash flow model based on revenue growth and long-run free cash flow margins. We then blend that result with the average analyst price target of $285.14 from 47 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $491.69 per share.
Warnings
Gross margin of 84% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Wall Street's average price target is $285.14 (from 47 analysts). Our estimate is 103% above the consensus -- consider that gap carefully.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep