Blackbaud (BLKB Quick QuoteBLKB - Free Report) appears to be a promising stock to add to the portfolio to tackle the current macroeconomic and geopolitical uncertainties and benefit from its healthy fundamentals and growth prospects.

Let’s look at the factors that make the stock an attractive pick:

Shares Outperformed: Wall Street is facing extreme volatility due to macroeconomic factors, such as rising inflation and interest rate hikes by the Federal Reserve, increased crude oil prices and lingering supply-chain woes.

The above-mentioned factors are taking a toll on major U.S. indices. In the past year, the S&P 500 has fallen 9.8%. BLKB’s shares have gained 17.2% in the past year against a 2.2% fall of the Zacks sub-industry.

Image Source: Zacks Investment Research

Solid Rank: BLKB currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Positive Earnings Surprise History: BLKB has an impressive surprise record. Earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters, the average being 6.2%.

The company reported non-GAAP earnings of 68 cents per share in fourth-quarter 2022, which surpassed the Zacks Consensus Estimate by 17.2%. The bottom line declined 9.3% year over year.

Total revenues increased 10.8% year over year to $274.8 million but missed the Zacks Consensus Estimate by 0.8%.

Robust Estimates: The Zacks Consensus Estimate for 2023 and 2024 earnings is pegged at $3.43 and $3.84, indicating year-over-year growth of 27.5% and 12.2%, respectively.

Revenues for 2023 and 2024 are estimated to be $1.09 billion and $1.13 billion, indicating year-over-year growth of 2.8% and 4.1%, respectively.

For 2023, the company expects non-GAAP earnings per share to be between $3.30 and $3.60. Also, non-GAAP revenues are expected to be between $1.08 billion and $1.11 billion.

Solid Business Model

Blackbaud combines technology and expertise to offer a wide array of cloud-based and on-premise software solutions and related services for organizations of all sizes. It continues to invest heavily in cloud-based applications and software, which is expected to bolster long-term growth.

Per a report from Grand View Research, the global cloud computing market was valued at $483.9 billion in 2022 and is expected to witness a CAGR of 14.1% from 2023 to 2030.

The company is benefiting from higher contractual recurring revenues owing to synergies from the previous acquisition of EVERFI. In the fourth quarter, total recurring revenues amounted to $265.2 million, up 11%, contributing 96.5% to total revenues.

Frequent product launches and synergies from recent acquisitions bode well. The company added more than $14 billion in the total addressable market (TAM) through acquisitions and new product launches from 2014 to 2021.

Also, increasing customer renewal rates are major tailwinds. The company had more than 40,000 customers under contract in 2022.

Recent Developments

In March, the company introduced a new feature, Good Move, to its TeamRaiser software in the United States and Canada. The feature leverages Kilter’s technology, which was acquired by Blackbaud in late 2022.

Good Move is a “mobile-first gamified activity-tracking” and peer-to-peer fundraising experience aimed at helping charitable organizations engage their supporters and raise funds.

Also, the company announced that it had rejected Clearlake Capital Group’s offer to acquire the company for $71 per share in cash. Blackbaud then received a letter from Clearlake Capital Group, L.P, following the rejection of the latter's acquisition proposal.

Clearlake stated it was “disappointed” that Blackbaud’s board rejected Clearlake’s “highly attractive” takeover proposal. The company has reiterated its offer of $71 per share in cash.

Prior to that, the company announced the general availability of SKY API endpoints for its Blackbaud CRM and Blackbaud Altru solutions. The inclusion of SKY APIs will help Blackbaud's partners create new integrations and offer customers alternatives to address their unique needs and transform business processes.

Few Headwinds

Apart from its solid fundamentals, the company is prone to several risks. The company operates in a highly competitive and capital-intensive cloud market. This is likely to negatively impact the company’s performance.

Also, softness in transactional revenue owing to elevated variability in payment services across the United States is a headwind. A leveraged balance sheet is an added concern.

Other Stocks to Consider

Some other top-ranked stocks in the broader technology space are Arista Networks (ANET Quick QuoteANET - Free Report) , Perion Network (PERI Quick QuotePERI - Free Report) and Pegasystems (PEGA Quick QuotePEGA - Free Report) , each presently sporting a Zacks Rank #1.

The Zacks Consensus Estimate for Arista Networks’ 2023 earnings has increased 11.5% in the past 60 days to $5.79 per share. The long-term earnings growth rate is anticipated to be 14.2%.

Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 14.2%. Shares of ANET have increased 16.9% in the past year.

The Zacks Consensus Estimate for Perion’s 2023 earnings has increased 16% in the past 60 days to $2.69 per share. The long-term earnings growth rate is anticipated to be 25%.

Perion’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 31.7%. Shares of PERI have increased 70.5% in the past year.

The Zacks Consensus Estimate for Pegasystems’ 2023 earnings has increased 101.5% in the past 60 days to $1.35 per share.

Pegasystems’ earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average surprise being 11.2%. Shares of the company have declined 43.1% in the past year.