We recently published a list of 10 Best Information Technology Services Stocks to Buy Right Now. In this article, we are going to take a look at where N-able, Inc. (NYSE:NABL)stands against other best information technology services stocks to buy right now.
The U.S. is the powerhouse when it comes to technology and information technology services. The U.S. is well-placed to continue to dominate the technology space, as per AXA Investment Managers. The AI boom led the market rally in 2024, with the broader market soaring over 25% last year. Whereas, the NASDAQ-100 Technology Sector experienced a similar surge of just over 25% in 2024. Over the past five years, the index has returned more than 133% as tech companies continue to dominate the broader market.
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AXA Investment Managers mentioned that the guidance from tech companies amid the new products and services indicates earnings growth will remain healthy moving forward. According to the report from Research and Markets, the United States Information Technology Services market is estimated to be valued at $461.03 billion as of 2024 and is projected to reach $630.76 billion by 2029, growing at a CAGR of 6.47% between 2024 and 2029.
Analysts are revising price targets on IT service companies that are involved in government contracts. The Trump administration’s latest policies pose a threat to companies that are offering IT related services to various government departments. The Department of Government Efficiency (DOGE), which Elon Musk leads, has conducted a campaign to radically downsize the federal government and discontinue numerous agency employees. Musk’s actions are not received well by industry executives. DOGE recently ordered the dismantling of the U.S. Agency for International Development (USAID), raising concerns about the control of massive databases with sensitive information by DOGE. The department is also pushing for authorized access to IRS data systems right in the middle of the tax filing season. Musk-led department is also expected to target the Pentagon soon, pledging cost cuts.
Despite these short-term risks and department scrutiny, the U.S. tech sector is set to grow with the advancement of AI and its increasing daily use cases. Analysts identify several IT services stocks with massive upside potential.
Our Methodology
We used the Finviz screener to compile a list of Information Technology Services stocks with an analyst upside of more than 20% as of February 17. We have also added the hedge fund sentiment around the stocks, as of Q3 2024. The stocks are sorted in ascending order of their hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician remotely monitoring and managing a server in a secure data center.
N-able, Inc. (NYSE:NABL)
Analyst Upside: 20.87%
No. of Hedge Fund Holders: 27
N-able, Inc. (NYSE:NABL) is a cloud-based IT management and security solutions provider for managed service providers (MSPs). The company’s products improve the efficiency and effectiveness of IT service delivery, such as remote monitoring and management, backup and disaster recovery, and cybersecurity solutions.
The company’s recently launched Adlumin Managed Detection and Response (MDR) solution at Ventnor City has already demonstrated its effectiveness, successfully preventing a cyber-attack within six hours of deployment. The AI-powered solution was able to protect the city’s police department from attempted intrusion. The MDR solution supports quick threat mitigation, with both automated and human response capabilities, and uses AI to identify threats.
On January 21, RBC Capital analyst Matthew Hedberg downgraded the price target on NABL shares from $15 to $12 and kept an Outperform rating on the stock. The analyst sees N-able, Inc. (NYSE:NABL) to have a conservative to start to 2025 as things will get better moving forward. Hedberg expects in-line to slightly better results following a solid Q3 2024 and the mid-quarter acquisition of Adlumin, which resulted in updated guidance for Q4 2024. The company expects its Q4 revenue to be in the range of $111.5 to $113 million, representing 3% to 4% year-over-year growth.
Conestoga Capital Advisors stated the following regarding N-able, Inc. (NYSE:NABL) in its Q4 2024 investor letter:
“Founded in 2000, N-able, Inc. (NYSE:NABL) is a leading software provider to managed service providers (MSPs), with over 25,000 customers. MSPs are essentially outsourced IT departments that, in turn, sell these tools downstream to small- to medium-sized businesses of all kinds. NABL is a 100% recurring revenue business that provides software tools, including security, data protection, and remote monitoring, to its MSP customers. NABL has a nearly $40 billion total addressable market, with durable tailwinds as the complexity of security, cloud migrations, and data storage increase.”
Overall, NABL ranks 6th on our list of best information technology services stocks to buy right now. While we acknowledge the potential of NABL to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NABL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
