-- HubSpot (HUBS) is reorienting its go-to-market model to be agent-first, which is strategically sound long term, but the simultaneous shift in pricing, packaging and go-to-market focus introduces significant execution risk and drives the downgrade, BofA Securities said Friday.
The brokerage said it expects this to impact investor sentiment until clear traction is proven, which could take multiple quarters.
BofA reinstated coverage of HubSpot in March with a buy rating, noting that an AI-agent-led H2 growth reacceleration to 20% warrants a positive re-rating. After Q1 results, BofA believes its bullish call was premature.
Net new annual recurring revenue growth was slightly below Q1 revenue growth, with Q2 potentially following the same pattern given the retraining of sales representatives on the new go-to-market model in April, according to the note.
The investment firm said HubSpot's guidance continues to imply growth in H2, which shifts the guidance setup towards a "beat and keep" for the next two quarters, as opposed to its prior expectations for a consistent beat and raise cadence.
BofA downgraded HubSpot to underperform from buy and lowered the price objective to $180 from $300.
Shares of HubSpot were down more than 20% in Friday trading.
Price: $193.61, Change: $-50.11, Percent Change: -20.56%