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HubSpot Lures Investors With Robust Product Enhancements

Zacks Equity Research

HubSpot HUBS recently announced innovative digital functionalities on its Analyst Day event, INBOUND 2019. The company is strengthening its platform with enhanced user engagement and greater reliability.

HubSpot rolled out intelligent duplicate management tool, which leverages ML to identify and merge duplicate company data. This tool is anticipated to aid the company’s Enterprise and Professional customers to effectively deal with data inefficiencies caused due to deduplication of data.

Moreover, HubSpot’s new app marketplace comprises third-party tools to aid users capitalize on latest integrations and seamlessly connect processes, teams, tools, and data within a connected system.

We believe latest enhancements across subscription services including CRM, Sales Hub, Service Hub and Marketing Hub offerings are expected to lead to incremental adoption, which in turn will favor the top line.

Coming to price performance, shares of HubSpot have returned 56% year to date, outperforming the industry’s rally of 31.8%.

Noteworthy Developments Bode Well

HubSpot announced eSignature tool, "Buy Now" checkout capabilities, among others to its Sales Hub Professional offering.

The company is striving to update Conversations features to streamline customer experience management. In fact, a free Facebook Messenger integration is available in beta, which allows customers with Facebook Business page to design a Messenger experience to manage interactions seamlessly from Conversations inbox.

HubSpot rolled out knowledge base editor for Service Hub Enterprise and Professional customers. The company’s email editor tool is available for use across Marketing Hub offering.

We believe, the company is anticipated to benefit from user and partner integrations backed by the latest robust initiatives.

Ongoing Efforts Favor Growth Prospects

HubSpot is expected to gain from robust adoption of its inbound marketing and sales applications over the cloud in the digital transformation era.

The company is striving to improve subscription levels with portfolio expansion and collaborations. Integration of its various in-house offerings is likely to boost adoption of subscription services. Notably, the company’s customer base surged 35% to 64,836 in the last reported quarter.

Further, positive trend in conversion of freemium users to paid subscribers remains a key catalyst.

As increasing digitization is leading to customization of platforms, the latest product enhancements reinforce the company’s efforts to expand penetration across small and medium businesses.

Zacks Rank & Other Stocks to Consider

HubSpot currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the same industry worth considering are Chegg, Inc. CHGG, Benefitfocus, Inc. BNFT and Paylocity Holding Corporation PCTY, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Chegg, Benefitfocus and Paylocity is currently pegged at 30%, 25% and 20%, respectively.

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