What happened

Shares of HubSpot (HUBS 1.54%) rose 27.7% during the month of August, according to data from S&P Global Market Intelligence. The sales and marketing software-as-a-service provider delivered solid second quarter earnings in the early part of the month, and analysts hiked their price targets in response.

Technology stocks also surged throughout the month, as HubSpot's cloud-based peers also impressed, leading to even more optimism for this pricey sector.

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Image source: Getty Images.

So what

In the second quarter, HubSpot grew revenue 25% and adjusted (non-GAAP) earnings per share came in at $0.34, handily beating analyst expectations. Customers actually grew by an even higher amount at 34%, which is encouraging, as HubSpot can up-sell new customers on more suite modules, or just sell more as small and medium-sized customers get bigger.

After the positive results, analysts from Canaccord Genuity and RBC both raised their price targets on the stock to $285 plus and $280, respectively. HubSpot's stock price quickly surged to those levels, and today the stock trades at $280, even after last week's technology sector sell-off.

Now what

After HubSpot's 41.5% surge in the first half of the year and last month's strong performance, HubSpot is no doubt an expensive stock, at over 17 times sales. Nevertheless, there are many cloud software stocks that trade at even higher valuations, and HubSpot has proved to be relatively resilient and well-positioned in this unique recession. The company is also quite well-managed and communicates clearly with investors.

While GAAP profits are still slightly negative, management has outlined long-term adjusted operating margins of 20-25%, versus 9.4% last quarter. Also important is the company's international opportunity, which is growing faster than the U.S. and made up 42% of revenue last quarter. Interested investors should thus keep their eyes out for both metrics going forward.

Overall, HubSpot stock seems a bit rich to me right now, but I've also thought that before and missed out on its strong gains this year. Investors should keep their eyes out for any material price pullbacks to get in on this high-quality software name, as it appears the company's long-term market opportunity remains intact.