We first profiled Veralto (VLTO) back in April 2024 as the stock was advancing and breaking out of a bullish pattern — one of the first breakouts it experienced since going public in September 2023. That helped kick-start a great run, which abruptly ended in October after a bad reaction to earnings. The stock then fell steadily through April, finally bottoming when the market pivoted. Along the way, VLTO constructed a substantial potential bullish inverse head-and-shoulders pattern. VLTO reported earnings again Monday, and the initial reaction was strong enough for the stock to finish above the breakout zone. If that can persist, the upside target of $124 would be live. Again, we don’t have much in the way of history for VLTO, given that it’s only been a public company for less than two years, but it has shown the ability to trend and capitalize on bullish patterns over this span. Here is a zoomed-out view of the weekly chart, highlighting the biggest breakouts from 2024. Now, after regrouping from its consistent downturn, it’s clear the current bullish pattern is the largest one the stock has built to date. Reaching the $124 target would also put the stock above its prior high point from last year. Often, stocks can reveal their technical character by how well they respond to breakouts. Said breakouts worked last year for VLTO, and this will be a good test as to whether they can work again going forward. Given the consistent decline since last October, VLTO has visibly underperformed the XLI Industrials ETF as well. Even though the stock has rallied since April, it has continued to display relative weakness versus its sector, as is clear on this chart. With so many areas of the market — including many industrial stocks — now very extended and trading well beyond their previous highs, if VLTO can continue its breakout, it could garner some additional attention. Eventually, that could encourage rotation out of the high-flyers and into areas that are just starting to break out, like VLTO. Rotation can happen from sector to sector, of course, but also within sectors. While we don’t recommend bottom-fishing, we do recommend rotating into technically sound patterns when previous breakouts in other areas have run their course. The bottom line is that VLTO has the chance to leverage a large bullish pattern once more, as it proved it could do last year. If it can repeat that process and extend this breakout attempt, the stock could be an attractive place to be on both an absolute and relative basis. DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
