Analysts are late in praising the upside case for LivePerson, Inc. (NASDAQ:LPSN), as the stock approaches 52-week highs once again. Barclays has a $35 price target on the stock, set on Mar. 8, while Evercore set a $34 target. With the stock trading at around $28 recently, what is there to like about LivePerson stock?

Strong Fourth Quarter

LivePerson made significant progress in adding high-profile customers. In the fourth quarter, it added Delta Air Lines (NYSE:DAL), Aramark, a firm operating in hospitality, a top-three bank in Japan, an Italian telco and a top-five global apparel retailer. Despite the contract wins, the company lost $6.5 million, or 11 cents a share. This is double last year’s loss of $3.7 million, or 6 cents a share. Markets are not nervous over the loss because the revenue gains from the deals will play out over several quarters. Plus, LivePerson wrote-down one-time costs. These are $1.7 million in restructuring, $1.0 million from acquisition and consulting fees and $900,000 from litigation costs.

Adjusted EBITDA improved to $5.3 million, up from $3.9 million last year. The company ended FISCAL 2018 with a cash balance of $66.4 million.

Outlook for 2019

LivePerson’s contract wins in the last quarter builds recurring revenue momentum for 2019. With more products to sell and more partners to sell with, the company is moving into the mainstream. Markets already bid the stock back to 52-week highs because it is pricing in an expansion in the company’s sales capacity. With the addressable market vastly bigger than the company’s ability to address it, LivePerson is growing its staff count. This year, it plans to expand its global field organization by adding 50% more staff and doubling the number of enterprise partner managers and lead generation representatives.

The higher headcount will add to operating costs, but the company should more than offset that when it adds more customers. It will take another three quarters to get there, but LivePerson forecasts revenue growth from the high-teens to 20% by Q4 of 2019. In 2020, management forecast sustained growth also in the 20% range or more.

Adjusted EBITDA will be in the range of $10 million-$15 million, while margins will be 4%-5%.

Low Profit Margin

Investors might consider margins of 4%-5% low. That is because the ramp-up in hiring will raise short-term costs. As sales reps win more and more deals, the long-term profit margin should reach low double-digits.

It has to.

Markets are leaving little room for disappointing revenue growth in 2019.

Growth Catalysts

Higher mobile usage is a growth catalyst for LPSN stock. LivePerson believes customers should not be using WhatsApp, IVR Deflections, or Apple Business Chat. So, it will replace them with web messaging. Already, mobile percentage interactions on LiveEngage is 54%.

Staff hiring is another positive catalyst for the company’s longer-term prospects. It is currently looking at 3,500 candidates a week. By choosing new hires having a mix between technology and go-to-market sales resources, LivePerson should have a strong team that will carry out its business growth.

Geographically, North America will continue to give meaningful growth. After North America enterprise grew 17%, investors should expect double-digit growth this year. In the fourth quarter, the company reported strong bookings, which was not limited to North America as International numbers came in strong.

Valuation

From the nine analysts covering LPSN stock, the average price target is $32.63 (according to tipranks). This 17% upside target comes despite the unfavorable valuations. By comparison, Salesforce.com (NYSE:CRM) trades at similar price/book multiples. International Business Machines (NYSE:IBM), by contrast, trades at a discount and offers investors a 4.6% dividend yield. But IBM is no longer growing, whilst LivePerson is winning key contracts each quarter.

Final Word

Investors have many business software services to choose from. LivePerson stock is another one that should get added to the watch list. Its 2019 is set to impress investors if it reports growth again and raises its outlook for 2020.

Disclosure: As of this writing, Chris Lau did not hold a position in any of the aforementioned securities.