UBS Reaffirms Buy on Freshworks (FRSH) as Attractive Valuation Trumps Execution Risks

Core Viewpoint - Freshworks Inc. is considered one of the best low-priced technology stocks to buy, with a focus on long-term financial targets and an updated outlook from UBS analyst Taylor McGinnis, who reiterated a Buy rating and a $19 price target [1][3]. Financial Targets - The company aims to exceed $1.2 billion in revenue by FY 2028, indicating an annual growth rate of 15%-16%, and targets free cash flow of over $340 million, with a margin of 28%-30% [2]. Analyst Insights - McGinnis noted that while there are execution risks due to challenges from seat-based SaaS models and rising AI adoption, the valuation of Freshworks remains attractive, particularly for CY 2026, with an EV/Sales ratio of approximately 3x and an EV/FCF ratio of 13x [3][5]. - Despite not adjusting the FY 2025 forecast, UBS has lowered the free cash flow margin forecast to 30% from 32% and set revenue growth at the lower end of management's range [4]. Company Overview - Freshworks Inc. operates as a SaaS provider, offering customer engagement and IT service management solutions through products like Freshdesk, Freshservice, and Freshsales [6].