Freshworks (NASDAQ:FRSH) Shares Gap Down Following Analyst Downgrade

Key Points

• Freshworks shares dropped after Wolfe Research downgraded the stock from Outperform to Peer Perform, opening at $12.87 versus the prior close of $14.15; shares later traded at $13.67.
• Analyst views were mixed: the consensus rating was Moderate Buy with a $15.46 price target, while several firms raised targets, including Cantor Fitzgerald to $20.
• Freshworks reported quarterly EPS of $0.22, beating the $0.18 estimate, and revenue of $245.43 million, up 14.1% year over year. It also forecast 2026 revenue of $965 million–$966 million, though shares reportedly fell after the results.

Freshworks Inc. (NASDAQ:FRSH - Get Free Report) shares gapped down prior to trading on Wednesday after Wolfe Research downgraded the stock from an outperform rating to a peer perform rating. The stock had previously closed at $14.15, but opened at $12.87. Freshworks shares last traded at $13.67, with a volume of 912,358 shares traded.

A number of other brokerages have also recently issued reports on FRSH. Piper Sandler boosted their target price on shares of Freshworks from $12.00 to $15.00 and gave the company a "neutral" rating in a report on Wednesday. Wells Fargo & Company upped their price objective on shares of Freshworks from $10.00 to $15.00 and gave the company an "equal weight" rating in a research note on Wednesday, October 28th. Weiss Ratings raised Freshworks from a "hold (c-)" rating to a "hold (c)" rating in a research note on Tuesday, September 29th. Needham & Company LLC reiterated a "buy" rating and set a $15.00 target price on shares of Freshworks in a report on Wednesday. Finally, KeyCorp initiated coverage on Freshworks in a research report on Monday, September 14th. They set an "overweight" rating and a $18.00 price objective on the stock. One investment analyst has rated the stock with a Strong Buy rating, seven have given a Buy rating and nine have given a Hold rating to the company. According to data from MarketBeat.com, the stock presently has a consensus rating of "Moderate Buy" and a consensus price target of $15.46.

Insider Activity

In related news, CAO Philippa Lawrence sold 3,492 shares of Freshworks stock in a transaction that occurred on Monday, October 5th. The stock was sold at an average price of $12.98, for a total transaction of $45,326.16. Following the sale, the chief accounting officer owned 379,639 shares of the company's stock, valued at approximately $4,927,714.22. This trade represents a 0.91% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Corporate insiders own 8.54% of the company's stock.

Key Freshworks News

Here are the key news stories impacting Freshworks this week:

• Positive Sentiment: Analysts raised their targets. Cantor Fitzgerald lifted its target to $20 and kept an Overweight rating; Piper Sandler raised its target to $15 while maintaining Neutral. Cantor Fitzgerald ratings Piper Sandler ratings
• Positive Sentiment: Profitability and cash generation stood out. Freshworks reported $0.22 in quarterly earnings per share, topping the $0.18 consensus, and record adjusted free cash flow of $73.9 million, up 29% year over year. It also reported GAAP net income of $18.3 million and its ninth consecutive quarter meeting the Rule of 40. Freshworks Q3 results
• Positive Sentiment: Management gave full-year targets. Freshworks expects 2026 revenue of $965 million–$966 million and is targeting more than $0.94 in adjusted free cash flow per share. 2026 outlook
• Neutral Sentiment: Revenue was $245.4 million, up 14% year over year and just above estimates of $245.06 million. The modest beat may have offered limited upside surprise. Q3 earnings and revenue
• Negative Sentiment: Shares fell after the report. Despite the earnings beat, coverage noted that the stock dropped, suggesting results or the outlook may not have cleared investor expectations. Freshworks shares after Q3 results

Institutional Investors Weigh In On Freshworks

A number of hedge funds and other institutional investors have recently added to or reduced their stakes in FRSH. Provenance Wealth Advisors LLC purchased a new position in Freshworks during the third quarter valued at approximately $28,000. Root Financial Partners LLC purchased a new position in shares of Freshworks during the 3rd quarter valued at about $29,000. Nykredit A S acquired a new stake in Freshworks during the second quarter valued at $28,000. Summit Securities Group LLC increased its position in shares of Freshworks by 186.3% in the first quarter. Summit Securities Group LLC now owns 6,043 shares of the company's stock valued at $49,000 after buying an additional 3,932 shares in the last quarter. Finally, Meeder Asset Management Inc. lifted its stake in Freshworks by 164.0% in the 1st quarter. Meeder Asset Management Inc. now owns 6,156 shares of the company's stock valued at $49,000 after buying an additional 3,824 shares in the last quarter. 75.58% of the stock is currently owned by hedge funds and other institutional investors.

Freshworks Stock Down 6.4%

The company has a 50-day moving average of $13.47 and a 200 day moving average of $10.48. The stock has a market capitalization of $3.46 billion, a PE ratio of 20.70, a PEG ratio of 9.47 and a beta of 0.80.

Freshworks (NASDAQ:FRSH - Get Free Report) last announced its quarterly earnings data on Tuesday, November 3rd. The company reported $0.22 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.18 by $0.04. The company had revenue of $245.43 million during the quarter, compared to analysts' expectations of $245.06 million. Freshworks had a net margin of 20.49% and a return on equity of 5.52%. Freshworks's revenue was up 14.1% compared to the same quarter last year. During the same quarter in the prior year, the company earned $0.16 EPS. As a group, equities analysts predict that Freshworks Inc. will post 0.05 EPS for the current fiscal year.

Freshworks Company Profile

Freshworks Inc NASDAQ: FRSH develops cloud-based customer and employee engagement software for businesses of various sizes. Its products are designed to help organizations manage customer support, IT service operations, sales activities, and marketing workflows through user-friendly, artificial intelligence-enabled applications.

The company's product portfolio includes Freshdesk for customer service and support, Freshservice for IT and enterprise service management, Freshsales for customer relationship management, and Freshmarketer for marketing automation and customer engagement.

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