What Happened?
A number of stocks jumped in the afternoon session after cooler-than-expected inflation data ignited investor optimism for a potential Federal Reserve interest rate cut. The July Consumer Price Index (CPI) report, an important measure of inflation, came in cooler than expected, showing prices holding steady at an annual rate of 2.7%. This data has led to speculation that the Federal Reserve might lower interest rates. For growth-focused sectors like SaaS, lower interest rates are particularly beneficial as they increase the present value of companies' future earnings, making their stocks more appealing.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Data Infrastructure company C3.ai (NYSE:AI) jumped 3.6%. Is now the time to buy C3.ai? Access our full analysis report here, it’s free.
- Data Analytics company Health Catalyst (NASDAQ:HCAT) jumped 9.3%. Is now the time to buy Health Catalyst? Access our full analysis report here, it’s free.
- E-commerce Software company Wix (NASDAQ:WIX) jumped 3.1%. Is now the time to buy Wix? Access our full analysis report here, it’s free.
- Automation Software company Jamf (NASDAQ:JAMF) jumped 4.8%. Is now the time to buy Jamf? Access our full analysis report here, it’s free.
- Virtual Events Software company ON24 (NYSE:ONTF) jumped 5%. Is now the time to buy ON24? Access our full analysis report here, it’s free.
Zooming In On Health Catalyst (HCAT)
Health Catalyst’s shares are extremely volatile and have had 41 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock dropped 21.5% on the news that the company reported second-quarter results that met expectations but slashed its full-year revenue forecast and provided a weak outlook for the upcoming quarter. The healthcare software provider’s revenue of $80.72 million and adjusted earnings per share of $0.04 were both in line with Wall Street estimates for the second quarter. However, investors were focused on the future, as the company projected third-quarter revenue of $75 million, which was roughly 12% below analyst expectations. Furthermore, Health Catalyst cut its full-year revenue forecast by 7.5% to $310 million. While the company did beat adjusted EBITDA estimates for the quarter and raised its full-year outlook for the metric, the significant reduction in its revenue guidance overshadowed the positive news, sending shares lower.
Health Catalyst is down 59.2% since the beginning of the year, and at $2.99 per share, it is trading 66.9% below its 52-week high of $9.02 from December 2024. Investors who bought $1,000 worth of Health Catalyst’s shares 5 years ago would now be looking at an investment worth $91.63.
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