Squarespace Upgraded at JMP Securities, Shares Gain 3%

JMP Securities analysts upgraded Squarespace (NYSE:SQSP) from Market Perform to Market Outperform, setting a new price target of $40.00. As a consequence, shares rose more than 3% intra-day today.

The analysts' upgrade is backed by their optimism about the company's growth prospects. They pointed out that revenue contribution from Google Domains, as domains are renewed, is a positive factor. The analysts’ estimates, which are above consensus, suggest organic high-single-digit bookings and revenue growth for Squarespace in 2024, excluding the contribution from Google Domains. The analysts consider this forecast conservative, given the company's successful international localization efforts and the continued benefits from international legacy price increases.

The analysts also noted that Squarespace currently trades at a discount compared to its competitor Wix, based on the 2025 Free Cash Flow (FCF) multiple. They believe this positions Squarespace for potential outperformance in 2025, with opportunities for upside to their estimates and for valuation multiples to readjust.