Freshworks (FRSH) meets the criteria for a dislocated stock with limited further downside, durable growth at a reasonable price, and defensible competitive moats, Oppenheimer said in an earnings preview Wednesday.

Oppenheimer described company-specific trends in Q1 as mixed. On the positive side, hiring trends improved and exceeded seasonal averages, which the analysts see as a signal of healthy pipeline momentum. However, broader small and medium-sized business market data showed signs of weakening, potentially indicating a more challenging operating environment.

Artificial intelligence adoption at Freshworks is trending positively, according to analysts, with early traction for its AI products like Copilot. Still, they noted that greater monetization and financial impact remain ahead, with customer penetration currently below 3%.

Management is working on expanding adoption through freemium models and updated pricing strategies, according to the note.

Despite recent investor caution, particularly around the long-term outlook for the customer experience business and questions over AI's impact, Oppenheimer believes the stock is well-positioned.

With software investors in a more defensive stance due to market volatility and macro uncertainties, Freshworks' valuation and strong balance sheet make it a compelling option.

Oppenheimer has an outperform rating on the stock and lowered its price target to $19 from $24.