U.S. Markets closed

Blackbaud Upgraded to Strong Buy

Zacks Equity Research

On Mar 9, Zacks Investment Research upgraded Blackbaud Inc. (BLKB) to Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Blackbaud has been witnessing rising earnings estimates on the back of strong fiscal fourth-quarter 2012 results and encouraging full-year 2013 outlook. Moreover, this well-known software solutions provider delivered positive earnings surprise in the last quarter with a surprise of 58.8%. The long-term expected earnings growth rate for this stock is 15.0%    

Blackbaudreported fiscal fourth-quarter (ended Dec 31, 2012) results on Feb 13, 2013. Non-GAAP earnings per share came in at 27 cents, surpassing the Zacks Consensus Estimate and year-ago earnings of 17 cents by 58.8%.

Each of the company’s business units performed well during the quarter and the recent acquisition of Convio was accretive to the earnings with its Luminate product line. In addition, the company also gained through its go-to-market strategies.  

Earnings growth, both year-over-year and sequentially, were primarily driven by disciplined cost management and significant cost synergies from the Covio acquisition.

Based on its progress, the company provided an encouraging guidance for full year 2013. For the full year 2013, Blackbaud expects total non-GAAP revenue in the range of $495 million to $505 million.

Revenue guidance takes into account a negative impact of approximately $6 million related to incremental progress rationalizing and integrating the product suite and due to changing contractual terms with the company’s product partner in the ticketing area, which requires it to move from gross to net revenue recognition for sales in the related solution. However, this adjustment will have no impact on the profitability.

Non-GAAP operating margin is expected in the range of 19% to 19.5%, reflecting approximately 250 basis points growth from the prior year.

The Zacks Consensus Estimate for fiscal 2013 increased 8.6% to 88 cents per share as most of the estimates were revised higher over the last 30 days.

Other Stocks to Consider

The following software solution providers with favorable Zacks Rank are also performing well and are worth considering.

  • Symantec Corp. (SYMC) carries a Zacks #1 Rank (Strong Buy)
  • Synopsis Inc. (SNPS) carries a Zacks #1 Rank (Strong Buy)                
  • Pervasive Software Inc. (PVSW) carries a Zacks #1 Rank (Strong Buy)

Read the Full Research Report on BLKB

Read the Full Research Report on SYMC

Read the Full Research Report on SNPS

Read the Full Research Report on PVSW

Zacks Investment Research

More From Zacks.com