On Tuesday, KeyBanc Capital Markets began coverage on shares of HashiCorp Inc (NASDAQ: NASDAQ:HCP), assigning a Sector Weight rating to the cloud infrastructure automation company.
The firm acknowledged the positive steps HashiCorp has taken towards better monetization strategies, such as the adoption of the Business Source License (BSL), the introduction of new products like Terraform Stacks, and the recent launch of Long-Term Support (LTS) services.
KeyBanc expressed a cautious outlook on the company's future growth, noting that while there are indications of early cloud improvement, the path to achieving a 20% growth rate by fiscal year 2026 is still uncertain. The firm's analysts are seeking greater confidence in HashiCorp's monetization efforts and the recovery of cloud spending and priorities.
Despite the cautious stance, KeyBanc pointed out that HashiCorp's valuation appears attractive. The company's expected enterprise value to sales ratio for fiscal year 2026 is 6.5 times, which represents a 0.5-turn discount compared to peers in the 10-20% growth category. The analyst firm is looking for further evidence of progress in HashiCorp's platform and recovery in cloud spending to potentially adjust their rating.
The Sector Weight rating suggests that KeyBanc views HashiCorp's stock as likely to perform in line with the average returns of the sector over the next 12 months. The rating reflects a neutral stance, indicating that the firm does not have a strong conviction on the stock's outperformance or underperformance at this time.
HashiCorp Inc's shares will continue to be monitored by KeyBanc for signs of improvement in the areas of monetization and cloud industry recovery, which could influence future evaluations of the stock's potential.
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