IBD Stock Analysis
- Ventures into buy zone from cup-with-handle base and buy point at 544.93
- Shares soared more than 150% in 2020; investors snapped up software stocks
- Stock hit a low of 415.42 March 30 but revived while others in sector lagged
Industry Group Ranking
Cup with Handle
* Not real-time data. All data shown was captured at
1:17PM EDT on
HubSpot is the IBD Stock of the Day as the seller of digital marketing software breaks out above a cup-with-handle entry point. HubSpot stock has advanced 10% this week after rolling out a new product.
Shares in HubSpot (HUBS) soared more than 150% in 2020 as investors gobbled up software growth stocks. HubSpot stock also gained in early 2021 but software growth stocks swooned in February as 10-year U.S. Treasury yields rose.
HubSpot shares corrected 24%, hitting a low of 415.42 on March 30. Many software growth stocks are still in the doldrums amid a rotation to value stocks.
But HubSpot stock clawed its way back, forming a new base with an entry point of 544.93. The cup-with-handle base pattern is one of the most common. Others include ascending base, base on base, double bottom, flat base, high tight flag, IPO base and saucer.
With Friday’s gain, HubSpot stock moved into a buy zone. Shares climbed 3.9% to 555.13 in recent action.
HubSpot Stock: Earnings Due May 5
Cambridge, Mass.-based earnings are due May 5 after the market close. To lower risk, one way to play HubSpot earnings might be to use an options strategy.
HubSpot sells sales and marketing software to small and midsize businesses. It focuses on digital channels such as blogs, internet search engines and social media.
HubSpot aims to attract people to customer websites and optimize content so that visitors are converted into paying customers.
The software maker on April 20 rolled out Operations Hub, “a set of tools aimed at information technology department operations teams that support “revenue generating functions,” KeyBanc Capital Markets analyst Michael Turits said in a report to clients.
He added: “The announcement seems to further management’s strategy of bringing enterprise grade features down market while maintaining the simple user experience required by small- and medium-size businesses.”
HubSpot aims to attract people to customer websites and optimize content so that visitors are converted into paying customers. The company recently has expanded beyond marketing into sales automation and customer relationship management products, or CRM.
HubSpot Expands Ties To Amazon Web Services
In the CRM market, HubSpot also competes with Zendesk (ZEN).
Bank of America analyst Brad Sills recently initiated coverage with a buy rating. He pointed to HubSpot’s “large installed base of over 103,000 customers and robust partner network of hundreds of digital marketing agencies” as well as a “large inbound sales organization.”
“HubSpot is well positioned to continue gaining share in the vast SMB front-office applications industry,” Sills said in his note to clients.
HubSpot has expanded its ties to Amazon Web Services, part of Amazon.com (AMZN). AWS is the biggest provider of cloud-computing services. HubSpot’s marketing software has been hosted on AWS’ cloud platform for several years.
Software Growth Stocks To Watch
HubSpot’s Relative Strength Rating is 95 out of a best-possible 99, according to IBD MarketSmith analysis. The best stocks tend to have an RS rating of 80 or better.
In addition, HubSpot stock has an Accumulation/Distribution Rating of B-plus. The rating analyzes price and volume changes in a stock over the past 13 weeks of trading. On an A+ to E scale, the rating measures institutional buying and selling in a stock. An A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
HubSpot is one of many software growth stocks to watch. Many have software-as-a-service business models.
ServiceNow (NOW) kicks off earnings on April 28. Guidance will be key for software growth stocks.
HubSpot’s December quarter adjusted earnings were 45 cents a share, up 22% from the year-earlier period. Revenue climbed 29% to $186.2 million.
HubSpot recently acquired PieSync, which operates a customer data analytics platform. Terms were not disclosed.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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