HUBS
HubSpot, Inc.
$201.97
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Undervalued
Trading 58.7% below fair value
You pay
$201.97
Bear
$237.14
Fair
$489.05
Bull
$802.41
Bear
$237.14
+17.4%
15% rev growth, 21% terminal margin
Fair
$489.05
+142.1%
26% rev growth, 28% terminal margin
Bull
$802.41
+297.3%
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 $489.05 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 102% 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