Braze (BRZE): Examining Valuation as Shares Lag Despite Revenue Growth

Braze (BRZE) stock has slipped this week, following a roughly 11% drop over the past month. Investors are watching closely for signs that the company's recent momentum in revenue growth, which is tracking at 14% year over year, can translate into lasting gains.

See our latest analysis for Braze.

Braze’s share price has struggled to regain ground, with a lower year-to-date share price return and a 1-year total shareholder return also in negative territory. This is despite the company’s continued revenue growth and recent product updates. While short-term price momentum has faded, investors will be watching for signs that the business can turn its operational progress into a rebound for shareholders over the longer term.

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With shares still well below analyst targets and ongoing revenue growth, the debate is whether Braze is offering a relative discount or if investors have already accounted for all foreseeable progress in the current price.

Most Popular Narrative: 38.5% Undervalued

At $27.74, Braze’s share price sits notably below the narrative’s $45.11 fair value, which reflects optimistic forecasts for continued revenue acceleration and improved margins. The most followed narrative centers on the belief that recent execution and expansion initiatives could materially shift the company’s valuation.

Bullish analysts cite Braze's Q2 earnings beat, with revenue and cRPO growth accelerating and significant margin expansion, as evidence of strong execution and improved outlook. Improved operating efficiency, broad-based demand strength, and lower-than-expected down-sell contributed to operating margins and financial results exceeding expectations.

Read the complete narrative.

Want to know which ambitious targets underpin that fair value? The narrative’s calculation rides on bold bets about rapid revenue growth and a future profit surge worthy of much larger names. Intrigued by the growth formula behind this hope-fueled price target? See inside for the numbers and tensions driving the story.

Result: Fair Value of $45.11 (UNDERVALUED)

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

However, integration challenges with OfferFit and tightening global data laws could undermine Braze’s profit margin improvements and disrupt its growth narrative.

Find out about the key risks to this Braze narrative.

Another View: Our DCF Model Tells a Different Story

While analyst targets currently point to Braze being undervalued, the SWS DCF model offers a more cautious view. The current share price sits above its DCF-derived fair value of $24.76, so the model suggests the stock might be overvalued. Which approach will prove more accurate as the story unfolds?

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 see the numbers differently or want to dig into the details yourself, you can build your own perspective in just a few minutes, and shape the story to match your view. 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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