Freshworks stock rating reiterated by Cantor Fitzgerald on AI innovation

Cantor Fitzgerald reiterated its Overweight rating and $20 price target for Freshworks (FRSH) following the company's REFRESH event, citing the firm's favorable risk/reward scenario based on a valuation of 5x FY26 estimated revenue. The positive sentiment is driven by Freshworks' focus on AI-driven enhancements to its Freshservice and Freshdesk products, with recent Q1 2025 results showing revenue of $196 million (up 19% YoY) and non-GAAP EPS of $0.18, both exceeding analyst expectations. Scotiabank also raised its price target to $18, maintaining a Sector Perform rating, based on steady billings growth and revenue forecast revisions.

Analysis

Cantor Fitzgerald has reaffirmed its Overweight rating and a $20.00 price target for Freshworks Inc. (NASDAQ:FRSH), subsequent to the company's REFRESH virtual event. This positive stance is supported by Freshworks' strategic emphasis on advancing its Freddy AI Agents within both Freshservice and Freshdesk product lines, aiming for autonomous problem resolution. The research firm views Freshworks' current valuation, cited at 5 times its FY26 estimated revenue and 25 times its FY26 estimated earnings per share, as presenting a favorable risk/reward profile. This assessment is further bolstered by Freshworks' robust first-quarter 2025 financial performance, where non-GAAP earnings per share reached $0.18, surpassing the consensus estimate of $0.13, and revenue hit $196 million, exceeding the anticipated $192 million and reflecting a 19% year-over-year increase. Billings for the quarter also outperformed expectations at $203 million, a 16% year-over-year rise, compared to a consensus of $198 million. While InvestingPro data indicates analyst targets for FRSH range from $12 to $27, with the stock currently trading at $15.66, it also suggests the company appears undervalued based on Fair Value analysis. Supporting this positive outlook, Scotiabank raised its price target for Freshworks to $18, maintaining a Sector Perform rating, primarily due to consistent billings growth and an upward revision in revenue forecasts for fiscal year 2025.

Key Decisions for Investors

• Investors may consider Freshworks' strong Q1 2025 results, particularly the 19% YoY revenue growth and earnings beat, alongside positive analyst sentiment and a potentially favorable valuation at 5x FY26 revenue as supportive of a bullish outlook.
• The ongoing development and integration of Freddy AI agents into Freshworks' core products represent a key growth catalyst; therefore, monitoring the adoption rate and impact of these AI capabilities on future earnings and market share is crucial.
• Given Cantor Fitzgerald's $20 price target and InvestingPro's fair value suggesting undervaluation against the current $15.66 price, investors could evaluate the risk/reward profile, while also noting Scotiabank's more conservative $18 target and Sector Perform rating.