HubSpot is the IBD Stock of the Day as the marketing software maker continues to make acquisitions to add artificial intelligence, sales automation and customer data management capabilities to its platform. HubSpot stock has climbed 19% in 2024.
On the stock market today, HubSpot stock climbed 1.8% to close at 694.48.
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 Entry Point
From a technical view, HubSpot stock holds a 693.85 entry point from a deep cup base. Alternatively, investors could use 724.61 — the 52-week high set on Nov. 13 — as a high-handle add-on entry.
HubSpot aims to attract people to customer websites and optimize content so that visitors are converted into paying customers. In the high end of the market, HubSpot competes against Salesforce and Adobe Systems.
At its Inbound customer conference in September, HubSpot unveiled "Breeze," its new AI engine powering copilots and agents. Many software companies are shifting to AI agents.
Also, Breeze Agents offer end-to-end task automation. Other Breeze AI features include customer engagement scoring, AI-assisted reporting and automation, data entry suggestions and translation for email.
AI Monetization In Flux
However, HubSpot is still mulling how to price new AI products.
"I'll say, one quick thing about the pricing question," said Chief Executive Yamini Rangan on the company's third-quarter conference call with analysts. "We will stay very, very consistent with our pricing philosophy. We are very, very focused on driving value, and we'll continue to do that."
He added: "In terms of agents, when agents begin to deliver consistent value, we'll likely have different (monetization) for agents, whether it is credit or tokens or something that is consumption-based. But right now, we're really focused on delivering value."
During the Inbound conference, HubSpot also hosted an analyst day.
Management raised its mid and long term operating margin targets. HubSpot now expects to achieve 20% to 22% non-GAAP operating margins by 2027, up from earlier guidance of 18% to 20% margins by 2026.
HubSpot Stock: Acquisition Strategy
Founded in 2006, HubSpot has made 17 acquisitions, with its most recent being Cacheflow. Cacheflow expanded HubSpot's capabilities in subscription billing management.
Also, Boston-based HubSpot acquired business-to-business data provider Clearbit in late 2023. Clearbit had over 1,500 customers. AI-related acquisitions included Hustle and Mindstream.
"I think our approach to M&A has remained consistent," Rangan said on the earnings call. "We take a very Apple-esque approach to M&A. And the approach is to look for great technology, great talent that can accelerate our customer platform vision."
He added: "And we want to do that in a way where we do not disrupt the great customer experience that we offer. And so we've gotten very comfortable with executing this type of an M&A playbook. We look for great talent that can accelerate innovation in very specific parts of our platform."
On an adjusted basis, HubSpot's September quarter earnings came in at $2.18 per share, up 37% from a year earlier. Revenue climbed 20% to $670 million. Analysts expected HubSpot earnings of $1.91 on sales of $647 million.
For the current quarter ending in December, HubSpot forecast earnings per share of $2.19 at the midpoint of its outlook and revenue of $673 million. Analysts had predicted adjusted earnings of $2.18 a share on revenue of $670 million.
HubSpot Stock: Google Walks Away?
Google-parent Alphabet reportedly walked away from acquisition talks in early 2024.
HubSpot's Relative Strength Rating is 87 out of a best-possible 99, according to IBD Stock Checkup. The best stocks tend to have an RS Rating of 80 or better.
In addition, HubSpot stock has an Accumulation/Distribution Rating of A-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.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
