Adam Hotchkiss, an analyst from Goldman Sachs, maintained the Hold rating on Sprout Social (SPT – Research Report). The associated price target is $29.00.
Adam Hotchkiss has given his Hold rating due to a combination of factors affecting Sprout Social’s performance. The company reported its fourth-quarter revenue in line with expectations, but there was a noticeable deceleration in revenue growth, which has been a challenge as Sprout Social attempts to shift its business focus upmarket. This slowdown is compounded by increased scrutiny on customer budgets, impacting deal conversions.
Furthermore, management’s cautious approach to fiscal year 2025 revenue guidance, projecting around 11% year-over-year growth, reflects ongoing operational challenges and a better understanding of enterprise sales cycles. Despite a decline in net revenue retention, improvements in gross retention and encouraging growth in leading indicators like Billings and NTM RPO provide some optimism. However, Adam Hotchkiss remains neutral, awaiting further evidence that the company can overcome its growth slowdown before becoming more favorable on Sprout Social’s stock.