Shares of HubSpot (HUBS 0.30%) were sharply higher on Friday, surging as much as 11.5% even as the major market indexes slumped. As of 1:52 p.m. ET, the stock was still up 3.7%.
The catalyst that sent the cloud-based customer relationship management (CRM) specialist higher was its quarterly earnings report, which was far better than expected.
For the fourth quarter, HubSpot generated revenue of $369.3 million, which climbed 47% year over year. This resulted in adjusted earnings per share (EPS) of $0.63, an increase of 43%.
To put those numbers in context, analysts' consensus estimates were calling for revenue of $357.8 million and an adjusted EPS of $0.46.
HubSpot's customer metrics were equally robust. The company's customer count climbed to 135,442, up 30% year over year. HubSpot is not only adding new customers but getting existing customers to spent more as its average revenue per subscriber jumped 11%.
The company's bullish outlook gave investors confidence that its robust growth would continue. HubSpot is guiding for first-quarter revenue of $382 million at the midpoint of its guidance and adjusted EPS of $0.47, which would represent year-over-year growth of 36% and 38%, respectively. For context, analysts are calling for revenue of $381 million and EPS of $0.46, so management's forecast topped expectations on both counts.
In the wake of its robust earnings results, HubSpot stock scored an upgrade and price-target increase from Wall Street. Cowen analyst J. Derrick Wood upgraded the stock to outperform (buy) from market perform (hold) while increasing its price target from $600 to $750. That represents potential growth for investors of 40% compared to Thursday's closing price.
Wood considers HubSpot a "compelling" buying opportunity owing to the stock's 35% decline since November and management's "highly confident" tone regarding the durability of HubSpot's opportunity.
Customer feedback had been overwhelmingly positive regarding HubSpot's integrated commerce and payments features, which were introduced in October. By expanding these adjacent offerings, HubSpot has increased its total addressable market (TAM) to an estimated $87 billion.
Considering its 2021 revenue of just $1.3 billion, this represents a compelling opportunity for investors.