Last Update 26 Dec 25

Fair value Decreased 0.76%

BRZE: Gen AI Customer Engagement Is Expected To Drive Top Pick Upside

Analysts have slightly trimmed their price target on Braze to approximately $46.70 from about $47.06, citing a modestly lower valuation multiple, even as they highlight strengthening profit margin potential and long term upside from Gen AI driven customer engagement demand.

Analyst Commentary

Bullish analysts point to Braze's positioning in customer engagement software as a key beneficiary of Gen AI adoption, arguing that its platform is well suited to help enterprises monetize new AI driven capabilities and justify premium pricing over time.

While some near term sector volatility is expected following competitive AI announcements in adjacent marketing tools, analysts broadly see Braze's focus on modern, data driven engagement as a structural advantage that can support durable growth and margin expansion.

Bullish Takeaways

Bullish analysts highlight Braze's inclusion among top picks in application software. They view this as validation that its growth profile and execution are considered best in class within customer engagement.
Feedback from recent customer conversations is cited as evidence of strong demand for AI driven pilots and proofs of concept. This supports a thesis that Braze can convert current experimentation into larger budgets and higher net expansion from 2026 onward.
Gen AI functionality is seen as a direct monetization lever. Analysts expect Braze's target customers to capture value from advanced personalization, which in turn underpins expectations for sustained revenue growth and improving unit economics.
Relative to legacy marketing stacks, Braze is viewed as structurally better positioned to benefit from budget shifts toward modern engagement platforms. This supports confidence that the company can grow into and potentially exceed current valuation multiples.

Bearish Takeaways

Bearish analysts caution that recent AI product announcements in front office marketing, including tools from large AI platforms, may pressure sentiment and valuation multiples across the category. Braze may not be entirely insulated from broad based de rating risk.
There is concern that aggressive competition in inbound marketing and customer engagement tools could compress pricing or slow deal cycles, particularly if customers perceive overlapping AI capabilities across vendors.
Some investors worry that the timeline for incremental budget appropriation tied to Gen AI, which many expect to ramp in 2026, could leave Braze exposed to macro or competitive shocks in the interim if execution slips or sales productivity softens.
Given the strong recent share performance and elevated expectations embedded in top pick status, any sign of slower adoption of AI modules or weaker than anticipated margin progress could lead to outsized downside volatility in the stock.

What's in the News

Braze initiated fiscal Q4 2026 revenue guidance of $197.5 million to $198.5 million and updated full year 2026 guidance to $730.5 million to $731.5 million, underscoring confidence in demand trends and pipeline visibility (Corporate guidance).
BrazeAI Decisioning Studio is now available on Google Cloud Marketplace, streamlining procurement and deployment of Braze's reinforcement learning based decisioning engine directly within customers' Google Cloud environments and deepening its BigQuery centric data integrations (Client announcement).
At its Forge 2025 conference, Braze unveiled major platform enhancements including Zero copy Canvas Triggers, new WhatsApp Commerce, Flows and Carousels capabilities, and RCS Rich Cards, aimed at enabling richer, cross channel personalization at scale with less operational friction (Product related announcement).
Braze introduced breakthrough BrazeAI products, including Decisioning Studio, Operator, and Agent Console, to embed configurable AI agents and generative capabilities across campaigns, content, and analytics, positioning AI as a core orchestration layer in its customer engagement stack (Product related announcement).
Jasper announced a strategic integration with Braze, combining Jasper's AI powered, on brand content generation with Braze's real time orchestration to accelerate hyper personalized campaign creation and localization for enterprise marketers (Client announcement).

Valuation Changes

Fair Value: reduced slightly to approximately $46.70 from about $47.06, reflecting a modest pullback in the target valuation.
Discount Rate: edged down marginally to around 8.50 percent from roughly 8.52 percent, indicating a slightly lower perceived risk profile.
Revenue Growth: trimmed very slightly to about 17.54 percent from roughly 17.54 percent previously, implying essentially unchanged top line growth expectations.
Net Profit Margin: increased modestly to approximately 12.75 percent from about 12.42 percent, signaling improving profitability assumptions.
Future P/E: lowered moderately to roughly 56.9x from about 58.9x, pointing to a slightly less aggressive earnings multiple despite stronger margin expectations.

Braze's strategic acquisitions and AI enhancements are poised to boost revenue growth and market differentiation, improving earnings and net margins.
Geographic and vertical diversification, alongside large customer additions, promise strong revenue growth and better operating margins across various global industries.
OfferFit integration challenges and evolving data laws could impact Braze's net margins and scalability, while partner pricing dynamics threaten revenue stability.

Catalysts

About Braze

Operates a customer engagement platform that provides interactions between consumers and brands worldwide.What are the underlying business or industry changes driving this perspective?

Braze's acquisition of OfferFit is expected to enhance AI-driven optimization capabilities and lead to revenue growth through deal size expansion and differentiation in the market. This investment should drive better earnings and net margins as OfferFit's sophisticated AI solutions integrate into Braze's platform.
The increasing trend of legacy vendor replacement and vendor consolidation creates opportunities for Braze to capture more market share, leading to revenue expansion as brands upgrade to modern customer engagement strategies.
Braze's expansion of its Shopify integration and e-commerce capabilities should lead to higher engagement and conversion rates for customers, potentially boosting revenue through increased adoption in the retail and consumer goods verticals, which accounts for a significant portion of Braze's business.
Project Catalyst and new offerings such as Agentic AI promise better personalization and customer engagement, which can drive incremental revenue and improve net margins through the increased effectiveness and efficiency of marketing campaigns.
Continued geographic and vertical diversification, as well as strong large customer additions, are likely to drive robust revenue growth and improved operating margins as Braze expands its presence in industries like fintech, retail, energy, and telecommunications globally.

Braze Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Braze's revenue will grow by 17.9% annually over the next 3 years.
Analysts are not forecasting that Braze will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Braze's profit margin will increase from -16.8% to the average US Software industry of 13.1% in 3 years.
If Braze's profit margin were to converge on the industry average, you could expect earnings to reach $133.0 million (and earnings per share of $1.11) by about September 2028, up from $-103.9 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 50.4x on those 2028 earnings, up from -28.8x today. This future PE is greater than the current PE for the US Software industry at 36.6x.
Analysts expect the number of shares outstanding to grow by 2.81% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.49%, as per the Simply Wall St company report.

Braze Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The integration of OfferFit into Braze is expected to be modestly dilutive to non-GAAP operating income margins in the fiscal year, potentially impacting the company's net margins.
Braze's reliance on ongoing high-performance marketing engagements and value selling, while beneficial, also suggests a dependency on sophisticated client setups which might limit scalability and revenue growth if not executed well.
Concerns around evolving international data sovereignty laws and data center expansions could lead to increased operational costs and impact future net margins.
Any misalignment or delays in integrating OfferFit's technology with Braze’s platform could result in unexpected costs and disruptions, affecting both net margins and earnings.
The dynamic pricing and evolving strategies of partners like Meta, especially regarding quickly changing messaging channels, pose a risk to predictable revenue streams and might impact both short and longer-term earnings stability.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $43.722 for Braze based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $68.0, and the most bearish reporting a price target of just $35.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.0 billion, earnings will come to $133.0 million, and it would be trading on a PE ratio of 50.4x, assuming you use a discount rate of 8.5%.
Given the current share price of $26.99, the analyst price target of $43.72 is 38.3% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

OfferFit Integration And Shopify Expansion Will Open New Markets