HubSpot stock is Monday's pick for IBD 50 Growth Stocks To Watch as shares of the artificial intelligence leader have eased from a buy zone of a flat base. The AI stock got a lift on news that Google-parent Alphabet was interested in acquiring the company.
The deal would have to be approved by antitrust regulators. The acquisition would be Google's largest purchase, with HubSpot's market cap now topping $32 billion.
HubSpot develops customer relationship management software that combines marketing, sales, customer service, content, operations and commerce in a single platform. Its system of five modules, called hubs, can be used alone or bundled together.
The platform is used for hosting webpages, creating blogs, managing sales leads and customers, and analyzing and tracking user behavior.
Further, it uses AI in its website generator, content and email writer, meta description generator and social media blog writer. HubSpot holds the No. 2 spot out of 37 stocks in the computer software enterprise group. The group ranks No. 48 out of 197 IBD industry groups.
AI Stock Eases From Buy Zone
HubSpot stock broke out of a flat base in heavy volume and hit a 660 buy point on April 4, on the Google buyout news. The AI stock has traded around the 5% buy zone — which reaches to 693 — since the breakout, according to MarketSurge pattern recognition.
The stage-two flat base began forming in early February ahead of HubSpot's earnings report. Shares fell following the results and traded sideways in the base, holding above the 50-day moving average.
HubSpot dropped more than 3% on Monday and is back below the buy point. The stock is seeking support at its 21-day exponential moving average after testing the line Wednesday. The AI stock has gained nearly 11% this year so far, but is still more than 7% below its 52-week high of 693.85. Its relative strength line has trended mostly sideways in 2024 with little progress.
Earnings Grow But Taper
HubSpot topped fiscal fourth-quarter earnings and sales estimates on Feb. 14. Profit growth slowed from three quarters of triple-digit growth to 59% in the fourth quarter.
Analysts project a 25% rise in earnings growth for the first quarter, then 17% growth in the second quarter. Sales growth has ranged from 24% to 27% over the last five quarters.
Full-year 2024 estimates show 18% profit growth and 20% in 2025. HubSpot is expected to report its fiscal first-quarter earnings around May 1.
The AI stock holds a best-possible 99 IBD Earnings Per Share Rating. It also boasts a 98 Composite Rating. HubSpot's 1.7 up/down volume ratio indicates positive demand. Meanwhile, its B+ Accumulation Distribution Rating shows fairly heavy institutional demand over the last 13 weeks.
Mutual funds have also increased ownership of HubSpot stock, with 1,814 funds owning shares in March, up from 1,804 in December and 1,756 in September.
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