Bailey Pemberton
4 min read
Salesforce deal sends Braze into the spotlight
Braze (BRZE) has been in focus after Salesforce agreed to buy the company for US$47.50 per share in cash, a move that quickly pushed the stock up about 72% over a month.
Recent trading shows how sharply sentiment around Braze has swung. The 30-day share price return of 60.89% and 90-day share price return of 72.53% point to strong momentum. At the same time, the 1-year total shareholder return of 63.59% contrasts with a slightly negative 3-year total shareholder return, suggesting a deal driven reset rather than a steadily compounding story so far.
Scan beyond Braze and see which other software stocks are showing similar deal driven momentum in our hand picked 19 high quality undiscovered gems list.
Bulls see Salesforce’s US$47.50 bid as proof Braze deserved a richer multiple. Bears point to deal risk, ongoing losses and a flat 3 year shareholder record. Which side do the current numbers lean toward?
Most Popular Narrative: 3.7% Undervalued
Braze last closed at $45.79, while the most followed valuation narrative anchors fair value around $47.54. This roughly lines up with Salesforce’s $47.50 offer and frames current pricing as only modestly below that mark.
The analysts have a consensus price target of $47.54 for Braze based on their expectations of its future earnings growth, profit margins and other risk factors. In order for you to agree with the analysts, you’d need to believe that by 2029, revenues will be $1.3 billion, earnings will come to $161.1 million, and it would be trading on a PE ratio of 44.3x, assuming you use a discount rate of 8.5%.
See why 18 investors see Braze as 4% undervalued.
Result: Fair Value of $47.54 (UNDERVALUED)
Still, the Braze story can break if OfferFit integration fails to lift deal economics, or if legal challenges around the Salesforce bid drag out and unsettle outcomes.
Find out about the key risks to this Braze narrative.
Another View on Braze’s valuation
The analyst narrative pegs Braze close to fair value at around $47.54 per share, yet the SWS DCF model tells a different story. On that cash flow view, Braze at $45.79 trades about 17.7% below an intrinsic value of $55.64, which raises a simple question: Is the cash flow story more convincing than the multiple driven one for you?
Our DCF work is fully laid out if you want to see how sensitive that $55.64 figure is to the assumptions in play, and where you might disagree with them. Look into how the SWS DCF model arrives at its fair value.
