Needham Reaffirms Buy on Freshworks (FRSH), Sets $25 Price Target

Freshworks Inc. (NASDAQ:FRSH) is one of the AI Stocks Analysts Say You Should Watch Closely. On September 12, Needham analyst Scott Berg reiterated a Buy rating and $25.00 price target on the stock following the company’s Analyst Day.

According to the firm, Freshworks outlined building blocks to support its FY28 financial model, aiming for faster organic revenue growth and incremental FCF leverage to reach a “Rule of 45” framework.

The firm said that even though margin leverage seems highly achievable, there is risk sustaining 20% growth in the EX segment and scaling ITAM ARR beyond $100M.

Increasing deal sizes, more competitive products (i.e with Device42) and new partner motions are growth drivers for the stock.

“We attended Freshworks Analyst Day yesterday where the company detailed individual product building blocks to support its new FY28 financial model highlighted by modestly accelerating organic revenue growth and incremental FCF leverage driving towards a “Rule of 45″ framework. While we find the margin leverage to be highly achievable, we view the risks to the company’s $1.3B ARR target to be centered in sustaining a 20% growth rate in its EX segment and driving to $100mm+ in ITAM ARR. Mgmt notes increasing deal sizes, more competitive products (i.e with Device42) and new partner motions can support the growth but we do see law of large numbers as a potential headwind. We view targets for the CX, ESM, and AI segments to be relatively achievable versus current CX growth levels and what we believe is high demand for the ESM and AI modules.”

Freshworks Inc. is a software development company that provides software-as-a-service products.

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