Squarespace Inc is well positioned to gain share within the website building/hosting market as a design-first platform targeting "prosumers" - service professionals building websites for their small businesses, Bank of America analysts believe.
They are projecting above-average growth and profitability for the company in 2023 even as the Street considers Generative AI a risk for the entire website building industry due to GenAI's ability to automatically write scripts and webpages.
In a note to clients, they reinstated coverage on Squarespace stock with a ‘Buy’ rating and $35 per share price objective, believing services such as hosting and payments are tough to replicate with GenAI.
"We like management's ability to meet and beat revenue estimates from here, and we forecast 15% growth for 2023 (above the comparable group average)," the analysts wrote.
Analysts added that SquareSpace addresses a diverse customer base of service professionals, generating a broad base of recurring revenue.
And with a base package starting at $24 per month, they believe Squarespace has room to expand services while appealing to the broadest set of potential customers, differentiating itself from upmarket competitors such as Shopify, Wix, and GoDaddy.
Shares of Squarespace closed 2.4% lower to $28.20 on Tuesday but have gained 24% year to date.
Contact Sean at sean@proactiveinvestors.com