A Look at Braze's (BRZE) Valuation After Earnings Beat and AI Platform Integration

Braze (BRZE) is turning heads this week, and it’s not hard to see why. The company just exceeded its latest quarterly earnings estimates, as demand for its customer engagement platform remains strong and committed ARR jumped above the $700 million mark. In addition, Braze has successfully integrated the OfferFit acquisition, an AI decisioning platform, sparking new business wins around the globe—even though it reduced operating income in the short term. For investors, these headlines focus attention on growth potential and whether the market is starting to factor in these gains.

This momentum follows an eventful year for Braze. Although the stock slipped more than 25% year-to-date, recent weeks have told a different story with shares gaining 21% over the past 3 months. That bounce closely tracks with the earnings beat and positive signals on new business traction through AI enhancements, suggesting the market is recognizing improved fundamentals for the first time in a while.

With this rebound underway, some may wonder if Braze’s current price still offers an opportunity or if Wall Street is already factoring in another wave of future growth.

Most Popular Narrative: 28.8% Undervalued

According to the most widely followed narrative, Braze is currently undervalued, with the stock trading at a meaningful discount to its estimated fair value based on future growth expectations.

"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."

Wondering why analysts are betting big on Braze’s future? The valuation hinges on ambitious projections that challenge today’s software industry averages. There is one big lever driving the upside, but the details of what could move the stock even higher will surprise most investors. What is fueling such optimism? Could a key metric upend the consensus? The complete narrative reveals the underlying calculations that make this valuation so compelling.

Result: Fair Value of $45.11 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, challenges integrating OfferFit and shifting international data laws could pressure Braze’s margins and scalability. These factors could potentially slow the anticipated growth story.

Find out about the key risks to this Braze narrative.

Another View: Discounted Cash Flow Model

While some analysts see upside based on revenue growth expectations, the SWS DCF model suggests the current share price actually sits above estimated fair value. Could long-term growth assumptions prove optimistic, or is the market right?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Braze for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Braze Narrative

If you have a different view or want to dig deeper into Braze’s story, the data is open. Explore the numbers and craft your own perspective in just a few minutes. Do it your way

A great starting point for your Braze research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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