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Blackbaud (BLKB) Gains 33.4% YTD: Will the Trend Continue?
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Blackbaud (BLKB - Free Report) witnessed strong momentum this year, with its shares rallying 33.4% year to date compared with the S&P 500 composite rise of 13.3%.
Blackbaud is a well-known cloud software company. It offers a full spectrum of cloud-based and on-premise software solutions and related services for organizations of all sizes, especially social good organizations. It continues to invest heavily in cloud-based applications and software, which is expected to bolster long-term growth.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve into the factors working in favor of this Zacks Rank #2 (Buy) stock.
The company’s performance is driven by momentum in transactional revenues owing to robust demand for the company’s JustGiving platform. Also, rising volumes across its payment solutions is a major tailwind.
The company has a five-point growth strategy with an objective to deliver innovative products, drive booking growth, transactional revenue expansion, modernize pricing and multi-year customer contracts and improve cost management.
The company is investing in generative AI to further expand its footprint. In October 2023, the company announced that it was working on a new AI-powered, social impact reporting and storytelling solution — Impact Edge. Impact Edge will be integrating YourCause from Blackbaud and EVERFI from Blackbaud solutions within a single tool to consolidate data gathered from all reliable sources into one centralized location.
Also, the acquisition of EVERFI has helped the company to expand its total addressable market (TAM) by about two times. The company added more than $14 billion in the TAM through acquisitions and new product launches from 2014 to 2021.
The company now expects 2023 non-GAAP revenues to be between $1.095 billion and $1.125 billion. Non-GAAP earnings per share (EPS) are anticipated to be between $3.63 and $3.94.
BLKB’s 2023 and 2024 revenues are anticipated to rise 4.6% and 8% year over year, respectively. The company’s earnings are expected to increase 40.9% and 17% on a year-over-year basis in fiscal 2023 and 2024, respectively.
Despite strong demand, the company operates in a highly competitive and capital-intensive cloud market. This is likely to negatively impact the company’s performance. Stiff competition and unfavorable foreign currency movement are likely to weigh down on the company’s performance in the near term.
The Zacks Consensus Estimate for Asure Software’s 2023 EPS has increased 35% in the past 60 days to 54 cents.
Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 676.4%. Shares of ASUR have surged 68.4% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 5.6% in the past 60 days to $4.15.
WWD’s long-term earnings growth rate is 18.8%. Shares of WWD have gained 42.1% in the past year.
The Zacks Consensus Estimate for Watts Water’s 2023 EPS has increased 4.8% in the past 60 days to $7.78. The company’s long-term earnings growth rate is 7.5%.
Watts Water’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 12.5%. Shares of WTS have rallied 30% in the past year.
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Blackbaud (BLKB) Gains 33.4% YTD: Will the Trend Continue?
Blackbaud (BLKB - Free Report) witnessed strong momentum this year, with its shares rallying 33.4% year to date compared with the S&P 500 composite rise of 13.3%.
Blackbaud is a well-known cloud software company. It offers a full spectrum of cloud-based and on-premise software solutions and related services for organizations of all sizes, especially social good organizations. It continues to invest heavily in cloud-based applications and software, which is expected to bolster long-term growth.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve into the factors working in favor of this Zacks Rank #2 (Buy) stock.
The company’s performance is driven by momentum in transactional revenues owing to robust demand for the company’s JustGiving platform. Also, rising volumes across its payment solutions is a major tailwind.
The company has a five-point growth strategy with an objective to deliver innovative products, drive booking growth, transactional revenue expansion, modernize pricing and multi-year customer contracts and improve cost management.
The company is investing in generative AI to further expand its footprint. In October 2023, the company announced that it was working on a new AI-powered, social impact reporting and storytelling solution — Impact Edge. Impact Edge will be integrating YourCause from Blackbaud and EVERFI from Blackbaud solutions within a single tool to consolidate data gathered from all reliable sources into one centralized location.
Also, the acquisition of EVERFI has helped the company to expand its total addressable market (TAM) by about two times. The company added more than $14 billion in the TAM through acquisitions and new product launches from 2014 to 2021.
The company now expects 2023 non-GAAP revenues to be between $1.095 billion and $1.125 billion. Non-GAAP earnings per share (EPS) are anticipated to be between $3.63 and $3.94.
BLKB’s 2023 and 2024 revenues are anticipated to rise 4.6% and 8% year over year, respectively. The company’s earnings are expected to increase 40.9% and 17% on a year-over-year basis in fiscal 2023 and 2024, respectively.
Despite strong demand, the company operates in a highly competitive and capital-intensive cloud market. This is likely to negatively impact the company’s performance. Stiff competition and unfavorable foreign currency movement are likely to weigh down on the company’s performance in the near term.
Other Stocks to Consider
Some other top-ranked stocks in the broader technology space are Asure Software (ASUR - Free Report) , Woodward (WWD - Free Report) and Watts Water Technologies (WTS - Free Report) . Each stock presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Asure Software’s 2023 EPS has increased 35% in the past 60 days to 54 cents.
Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 676.4%. Shares of ASUR have surged 68.4% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 5.6% in the past 60 days to $4.15.
WWD’s long-term earnings growth rate is 18.8%. Shares of WWD have gained 42.1% in the past year.
The Zacks Consensus Estimate for Watts Water’s 2023 EPS has increased 4.8% in the past 60 days to $7.78. The company’s long-term earnings growth rate is 7.5%.
Watts Water’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 12.5%. Shares of WTS have rallied 30% in the past year.