Needham analyst Scott Berg maintained a Buy rating on Freshworks today and set a price target of $25.00.
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Scott Berg has given his Buy rating due to a combination of factors that highlight Freshworks’ potential for growth and financial stability. The company’s new financial model for FY28 emphasizes a balanced approach with modestly accelerating organic revenue growth and improved free cash flow leverage, aligning with the ‘Rule of 45’ framework. This model suggests that Freshworks is on a path to achieving significant financial milestones, making it an attractive investment.
Additionally, Freshworks’ management has indicated that increasing deal sizes and more competitive product offerings, along with new partnerships, are expected to drive growth. Although there are challenges, such as maintaining a 20% growth rate in the EX segment and achieving over $100 million in ITAM ARR, the targets for the CX, ESM, and AI segments appear to be within reach. These factors collectively contribute to Scott Berg’s optimistic outlook and Buy rating for Freshworks.