Klaviyo ticks up on back of Barclays upgrade

Klaviyo (NYSE:KVYO) was in focus on Wednesday after Barclays upgraded the marketing software firm, citing a "valuation discount" compared to its growth potential.

Shares rose 5.5% in premarket trading.

"Klaviyo sticks out as a top growth asset that has not been properly rewarded for its healthy execution," analyst Raimo Lenschow wrote in an investor note, citing its near 19% year-to-date decline. "We see Klaviyo as resilient thanks to the data model and many avenues for growth, despite SMB fears, and see a path for solid beats going forward." Lenschow raised his rating on Klaviyo to Overweight from Equal-Weight and upped his price target to $29 from $25. 

Investors are not giving Klaviyo credit despite the fact it is estimated to see 25% or more year-over-year growth in 2025, as evidenced by the fact it trades "essentially in line" with its software-as-a-service peer group at 5 times EV/sales.

"Hence, on a growth-adjusted basis, we view Klaviyo as trading at a steep discount to peers, perhaps unjustly due to the performance of sub-industry peers in the front office SaaS space," Lenschow added. "Therefore, we see room for the stock to rerate closer to the 8x EV/CY25E Sales level implied by extrapolating growth."

Analysts are largely bullish on Klaviyo (KVYO). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, has no rating on KVYO.