HubSpot is the IBD Stock of the Day as the software maker hovers near a buy point amid buzz over "generative" artificial intelligence technology and AI stocks. HUBS stock has outperformed many software growth stocks in 2023, though it pulled back in early March after a big run.
Cambridge, Mass.-based 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 stock has gained 37% in 2023. After tumbling more than a third in 2022, the iShares Expanded Tech-Software ETF — comprised of many of the major enterprise software players — is up 12%.
HUBS stock soared on its recent fourth-quarter earnings report and outlook. Earnings jumped 91% to $1.11 a share. Revenue climbed 27% to $470 million.
Shares edged down Friday to close at 397.48.
HUBS Stock Finds Support
HubSpot trades just below an entry point of 399.65. While HUBS stock pulled back recently, it found support at its 21-day exponential moving average. IBD research has found that with the biggest stock market winners, they tend to find support at the 21-day after a breakout for at least several weeks.
Meanwhile, its relative strength line is in the same area where HUBS stock traded prior to the earnings beat. But investors may want to wait for a pick-up in volume before taking a position.
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.
In the high end of the market, HubSpot competes against Salesforce and Adobe Systems.
HubSpot And Generative AI Stocks
Some analysts view the software company as among AI stocks to watch. HubSpot could get a boost from "generative AI" technologies such as ChatGPT.
Generative AI technology creates text, images, video and computer programming code. The new form of AI technology already is finding applications in marketing, advertising, drug development, legal contracts, video gaming, customer support and digital art.
HubSpot in February announced trials of "content assistant" and ChatSpot.ai.
"A meaningful number of marketing and customer service use cases can be solved today with (generative AI)," Wolfe Research analyst Alex Zukin said in a recent note to clients. "Marketers can find immediate process efficiencies with automated content creation in blog posts, email blasts, and display ads."
HubSpot's Relative Strength Rating is 93 out of a best-possible 99. 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.
HUBS Stock: Restructuring Move
HubSpot in January announced a restructuring plan to reduce operating costs and drive better profitability. The company reduced its workforce by 7%, or about 500 employees. Also, HubSpot consolidated some leases to generate savings on its real estate footprint.
For 2023, HubSpot has forecast earnings in a range of $4.24 to $4.32 a share. The company expects revenue in a range of $2.05 billion to $2.06 billion.
"We believe HubSpot is still in the early innings of driving operating margins higher," Goldman Sachs analyst Gabriela Borges said in a recent note.
At Bank of America, analyst Brad Sills views HUBS stock as a market share gainer.
"With continued execution across multiple channels and ongoing consolidation of the vast SMB (small and medium-sized businesses) front office apps market with the leading platform, we believe HubSpot is positioned to drive mid-20s revenue growth," he said in a note.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
