A hefty product suite and rising brand awareness could propel Squarespace shares, according to UBS. The investment bank initiated coverage of Squarespace with a buy rating accompanied by a price target of $40 per share. This forecast implies more than 45% upside from the stock’s close of $27.50 on Thursday afternoon. Analyst Chris Kuntarich highlighted Squarespace’s suite of content-generation AI products as a driver behind near-term subscriber monetization and long-term subscriber growth. “We think Squarespace is taking the right steps to position itself for durable revenue growth of at least mid-teens through FY25 as they expand deeper into international markets and sell more higher-priced subscriptions which should create a path for shares to work higher through positive estimate revisions,” Kuntarich wrote Thursday. The analyst also predicted margins should expand as the website builder’s fixed costs plateau, especially as growing brand awareness overseas allows the company to scale back its marketing efforts. Additionally, Kuntarich thinks Squarespace’s June acquisition of Google Domains could contribute another potential 6 percentage points of revenue growth. “While we think there is some low-hanging fruit around the Google Domains portfolio such as price increases, if SQSP can prove the acquisition delivers an incremental cost efficient on-ramp for customer acquisition this could bring more investors off the sidelines,” he said. Shares of the website builder have gained 24% this year, outperforming the S & P 500’s 12.8% advance in that time. However, they’ve fallen more than 12% in the third quarter. SQSP YTD mountain SQSP ytd chart — Michael Bloom contributed to this report
