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Here's Why Blackbaud (BLKB) Warrants a Bullish Stance Now
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Blackbaud (BLKB - Free Report) is one stock investors may consider adding to their portfolio to combat the highly-volatile market environment and make some gains from its upside potential. The company currently has a Zacks Rank #2 (Buy).
Wall Street has been witnessing high volatility since the beginning of 2022 due to the pandemic and supply chain woes, inflation, increasing crude oil prices and a tougher Fed policy. Recently, the Federal Reserve announced the largest interest rate hike of 75 basis points or 0.75% since 1994 to tackle the rising inflation.
Major U.S. indexes, including the Dow Jones Industrial Average and S&P 500, have plunged 17.7% and 23.2%, respectively, year to date.
Also, the ongoing Russia-Ukraine war has made investors apprehensive about the global economic recovery. The macroeconomic and geopolitical uncertainties will likely continue weighing on investors’ sentiments, resulting in more volatility in the U.S. equity market.
The volatility in the market has weighed on the company’s performance on the trading front. However, the stock is down 36.7% from its 52-week high level of $86.96 reached on Nov 8, 2021, making it more affordable for investors.
Blackbaud has an impressive earnings surprise history. The company outpaced estimates in three out of the trailing four quarters, delivering an average earnings surprise of 11.1%. The stock has long-term earnings per share (EPS) growth expectation of 5.7%.
The Zacks Consensus Estimate of $2.75 per share for 2022 earnings suggests growth of approximately 1.1% from the year-ago period. For 2023, the consensus mark for earnings is pegged at $3.13, indicating a year-over-year increase of 2.3%.
In the last reported quarter, Blackbaud’s total revenues increased 17.3% year over year to $257.1 million and surpassed the Zacks Consensus mark by 0.8%. The top line was driven by higher transactional volume and increases in contractual recurring revenues.
Blackbaud expects non-GAAP revenues between $1.075 billion and $1.095 billion. The company projects a non-GAAP adjusted EBITDA margin in the range of 24-24.5%. Non-GAAP earnings are expected to be between $2.63 and $2.82 per share. Non-GAAP adjusted free cash flow for the year is forecast in the range of $165-$175 million.
Strong Fundamental Drivers
Headquartered in Charleston, SC, Blackbaud is a well-known cloud software company. The company offers a full spectrum of cloud-based and on-premise software solutions and related services for organizations of all sizes especially social good organizations, including fundraising, eMarketing, advocacy, constituent relationship management (“CRM”), corporate social responsibility ("CSR"), financial management, payment solutions, analytics and vertical-specific solutions.
Blackbaud's cloud-based suite of applications demonstrates strong growth momentum driven by the transition of organizations from the traditional revenue-based model to the cloud-based subscription model. The overall growth expectation for the public cloud computing services market is very bullish. Exponential growth in the amount of data, the complexity of data formats and the need to scale resources at regular intervals compelled several companies to turn to cloud computing vendors. Considering the growing need for cloud-based applications and software, we anticipate Blackbaud's investments in this space to bolster long-term growth.
Blackbaud remains active on the acquisition front and chooses companies that can be easily integrated into its existing or new product lines. In January 2022, the company acquired EVERFI in a cash and stock deal worth $750 million. EVERFI expands Blackbaud’s total addressable market or TAM to more than $20 billion. Half of the company’s TAM now represents the lucrative corporate sector, added Blackbaud.
EVERFI provides Impact-as-a-Service (“IaaS”) solution and digital educational content, which is now being used by 45 million learners worldwide. The acquisition also provides cross-selling and upselling opportunities with Blackbaud’s YourCause solution.
Blackbaud acquired YourCause in 2019 for nearly $157 million. The buyout has strengthened Blackbaud’s position as one of the industry leaders in offering enterprise philanthropy solutions to non-profit organizations and for-profit business organizations that deal with social concerns.
The company’s JustGiving (2017) acquisition helped the company to expand its peer-to-peer fundraising abilities. Buyouts like AcademicWorks (2017) and Smart Tuition (2015) helped Blackbaud expand its offerings in the K-12 technology sector.
However, coronavirus-led macroeconomic weakness and sluggish demand across small- and medium-sized businesses are major headwinds. A leveraged balance sheet adds to the risk of investing in the company. Blackbaud suspended dividend payouts to maintain near-term liquidity amid the COVID-19 crisis.
The Zacks Consensus Estimate for Vishay Intertechnology’s 2022 earnings is pegged at $2.68 per share, rising 10.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 22.7%.
Vishay Intertechnology’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 5%. Shares of VSH have declined 16.7% in the past year.
The Zacks Consensus Estimate for InterDigital 2022 earnings is pegged at $3.28 per share, up 43.9% in the past 60 days. IDCC’s long-term earnings growth rate is pegged at 15%. InterDigital’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, with the average being 141.1%. Shares of IDCC have lost 18.9% of their value in the past year.
The Zacks Consensus Estimate for Avnet’s fiscal 2022 earnings is pegged at $6.83 per share, rising 20.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 37.2%.
Avnet’s earnings beat the Zacks Consensus Estimate in all of the last four quarters, the average being 21.22%. Shares of Avnet have grown 7.7% in the past year.
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Here's Why Blackbaud (BLKB) Warrants a Bullish Stance Now
Blackbaud (BLKB - Free Report) is one stock investors may consider adding to their portfolio to combat the highly-volatile market environment and make some gains from its upside potential. The company currently has a Zacks Rank #2 (Buy).
Wall Street has been witnessing high volatility since the beginning of 2022 due to the pandemic and supply chain woes, inflation, increasing crude oil prices and a tougher Fed policy. Recently, the Federal Reserve announced the largest interest rate hike of 75 basis points or 0.75% since 1994 to tackle the rising inflation.
Major U.S. indexes, including the Dow Jones Industrial Average and S&P 500, have plunged 17.7% and 23.2%, respectively, year to date.
Also, the ongoing Russia-Ukraine war has made investors apprehensive about the global economic recovery. The macroeconomic and geopolitical uncertainties will likely continue weighing on investors’ sentiments, resulting in more volatility in the U.S. equity market.
Blackbaud, Inc. Price
Blackbaud, Inc. price | Blackbaud, Inc. Quote
Why BLKB Appears a Smart Bet
The volatility in the market has weighed on the company’s performance on the trading front. However, the stock is down 36.7% from its 52-week high level of $86.96 reached on Nov 8, 2021, making it more affordable for investors.
Blackbaud has an impressive earnings surprise history. The company outpaced estimates in three out of the trailing four quarters, delivering an average earnings surprise of 11.1%. The stock has long-term earnings per share (EPS) growth expectation of 5.7%.
The Zacks Consensus Estimate of $2.75 per share for 2022 earnings suggests growth of approximately 1.1% from the year-ago period. For 2023, the consensus mark for earnings is pegged at $3.13, indicating a year-over-year increase of 2.3%.
In the last reported quarter, Blackbaud’s total revenues increased 17.3% year over year to $257.1 million and surpassed the Zacks Consensus mark by 0.8%. The top line was driven by higher transactional volume and increases in contractual recurring revenues.
Blackbaud expects non-GAAP revenues between $1.075 billion and $1.095 billion. The company projects a non-GAAP adjusted EBITDA margin in the range of 24-24.5%. Non-GAAP earnings are expected to be between $2.63 and $2.82 per share. Non-GAAP adjusted free cash flow for the year is forecast in the range of $165-$175 million.
Strong Fundamental Drivers
Headquartered in Charleston, SC, Blackbaud is a well-known cloud software company. The company offers a full spectrum of cloud-based and on-premise software solutions and related services for organizations of all sizes especially social good organizations, including fundraising, eMarketing, advocacy, constituent relationship management (“CRM”), corporate social responsibility ("CSR"), financial management, payment solutions, analytics and vertical-specific solutions.
Blackbaud's cloud-based suite of applications demonstrates strong growth momentum driven by the transition of organizations from the traditional revenue-based model to the cloud-based subscription model. The overall growth expectation for the public cloud computing services market is very bullish. Exponential growth in the amount of data, the complexity of data formats and the need to scale resources at regular intervals compelled several companies to turn to cloud computing vendors. Considering the growing need for cloud-based applications and software, we anticipate Blackbaud's investments in this space to bolster long-term growth.
Blackbaud remains active on the acquisition front and chooses companies that can be easily integrated into its existing or new product lines. In January 2022, the company acquired EVERFI in a cash and stock deal worth $750 million. EVERFI expands Blackbaud’s total addressable market or TAM to more than $20 billion. Half of the company’s TAM now represents the lucrative corporate sector, added Blackbaud.
EVERFI provides Impact-as-a-Service (“IaaS”) solution and digital educational content, which is now being used by 45 million learners worldwide. The acquisition also provides cross-selling and upselling opportunities with Blackbaud’s YourCause solution.
Blackbaud acquired YourCause in 2019 for nearly $157 million. The buyout has strengthened Blackbaud’s position as one of the industry leaders in offering enterprise philanthropy solutions to non-profit organizations and for-profit business organizations that deal with social concerns.
The company’s JustGiving (2017) acquisition helped the company to expand its peer-to-peer fundraising abilities. Buyouts like AcademicWorks (2017) and Smart Tuition (2015) helped Blackbaud expand its offerings in the K-12 technology sector.
However, coronavirus-led macroeconomic weakness and sluggish demand across small- and medium-sized businesses are major headwinds. A leveraged balance sheet adds to the risk of investing in the company. Blackbaud suspended dividend payouts to maintain near-term liquidity amid the COVID-19 crisis.
Other Stocks to Consider
A few other top-ranked stocks from the broader technology sector worth consideration are InterDigital (IDCC - Free Report) , Avnet (AVT - Free Report) and Vishay Intertechnology (VSH - Free Report) . Avnet and InterDIgital sport a Zacks Rank #1, while Vishay Intertechnology carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vishay Intertechnology’s 2022 earnings is pegged at $2.68 per share, rising 10.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 22.7%.
Vishay Intertechnology’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 5%. Shares of VSH have declined 16.7% in the past year.
The Zacks Consensus Estimate for InterDigital 2022 earnings is pegged at $3.28 per share, up 43.9% in the past 60 days. IDCC’s long-term earnings growth rate is pegged at 15%.
InterDigital’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, with the average being 141.1%. Shares of IDCC have lost 18.9% of their value in the past year.
The Zacks Consensus Estimate for Avnet’s fiscal 2022 earnings is pegged at $6.83 per share, rising 20.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 37.2%.
Avnet’s earnings beat the Zacks Consensus Estimate in all of the last four quarters, the average being 21.22%. Shares of Avnet have grown 7.7% in the past year.