Record inflation, a hawkish Fed policy, lingering supply chain issues and uncertainty prevailing over global macroeconomic conditions have raised investors’ apprehension.
Amid the ongoing volatility, Blackbaud ( BLKB Quick Quote BLKB - Free Report) is a stock that investors may consider adding to their portfolio to make some gains from its upside potential. The company currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The stock is down 40% 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 the Zacks Consensus Estimate in three of the trailing four quarters, delivering an average earnings surprise of 8.5%. The stock has long-term earnings per share growth expectation of 3%. The Zacks Consensus Estimate for 2022 for earnings stands at $2.55 per share. For 2023, the consensus mark for earnings is pegged at $3.07, indicating a year-over-year increase of 20.5%. the consensus mark for revenues for 2022 and 2023 stands at $1.06 billion and $1.11 billion, representing year over year growth of 14% and 5%, respectively. In the last reported quarter, Blackbaud’s total revenues increased 15.5% year over year to $264.9 million. The top line was driven by higher transactional volume and increases in contractual recurring revenues.
Blackbaud expects non-GAAP revenues between $1.05 billion and $1.07 billion. The company projects a non-GAAP adjusted EBITDA margin in the range of 23.7-24.2%. Non-GAAP earnings are expected to be between $2.43 and $2.63 per share. Non-GAAP adjusted free cash flow for the year is forecast in the range of $140-$150 million.
Healthy 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, corporate social responsibility, 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. Recently, Blackbaud acquired an activity-based engagement app, Kilter to support its event-based fundraising software — Blackbaud TeamRaiser, which offers a wide array of features to non-profit organizations hosting events. In January 2022, the company acquired EVERFI in a cash-and-stock deal worth $750 million. EVERFI expands Blackbaud’s total addressable market (“TAM”) to more than $20 billion. Half of the company’s TAM now represents the lucrative corporate sector, added Blackbaud. EVERFI provides an Impact-as-a-Service solution and digital educational content. The acquisition also provides cross-selling and upselling opportunities with Blackbaud’s YourCause solution. 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 had suspended dividend payouts to maintain near-term liquidity amid the COVID-19 crisis. Other Stocks to Consider
Some other top-ranked stocks from the broader technology space are
Synopsys ( SNPS Quick Quote SNPS - Free Report) , Pure Storage ( PSTG Quick Quote PSTG - Free Report) and Arista Networks ( ANET Quick Quote ANET - Free Report) . Pure Storage currently sports a Zacks Rank #1, whereas Arista Networks and Synopsys carry a Zacks Rank #2.
The Zacks Consensus Estimate for Synopsys’ 2022 earnings is pegged at $8.85 per share, up 4.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 16.2%.
Synopsys’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 3%. Shares of SNPS have gained 10.4% in the past year.
The Zacks Consensus Estimate for PSTG’s 2022 earnings is pegged at $1.18 per share, rising 24.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 35.5%.
Pure Storage’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 171.8%. Shares of PSTG have gained 14.8% in the past year.
The Zacks Consensus Estimate for Arista Network’s 2022 earnings is pegged at $4.04 per share, increasing 1.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 15.7%.
Arista Network’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.1%. Shares of ANET have risen 31.1% in the past year.