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What Will You Miss Out On by Overlooking Blackbaud Stock?

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Of late, shares of Blackbaud, Inc. BLKB have been gaining solid momentum. This rally can be attributed to the company’s expanding product portfolio as well as frequent product launches. Further, strong fundamentals and encouraging fiscal 2018 outlook drove its shares higher.

The company is focused on providing cloud software solutions and data-driven decisions, powered by artificial intelligence (AI), machine learning (ML), cognitive technology, predictive analytics and other advanced technologies. The launch of SKY AI and SKY Analytics provide scalable and high-quality services along with rapidly reducing the time required to introduce a semiconductor product in the market. We believe that increasing investments on emerging trends like Internet-of-things (IoT), digital marketing and cloud-based platforms presents significant growth opportunity for the company in the long haul.

Blackbaud also remains very active on the acquisition front and chooses companies that can be easily integrated within its existing or new product lines. From time to time, Blackbaud also acquires organizations with competing technologies with the intention of killing rival products. Over the last three years, the company has aggressively pursued acquisitions likely to bolster its presence in the cloud computing and database markets. These buyouts have also expanded the company’s total TAM. We believe that Blackbaud will continue to pursue strategic acquisitions to improve market share and top-line, going forward.

Blackbaud is a leading cloud software company working for non-profit organisations and social good. Its cloud-based suite of applications demonstrates strong growth momentum driven by its transition from the traditional revenue-base model to the cloud-based subscription-based model. The company’s returning cash to investors in form of dividends and share repurchase are other key catalysts.

Positive Outlook

The company reiterated fiscal 2018 guidance. Management continues to expect fiscal 2018 revenues in the range of $870-$890 million. The Zacks Consensus Estimate is pegged at $879.9 million.

Non-GAAP earnings per share are still expected to be in the range of $2.75-$2.88 per share. The Zacks Consensus Estimate is pegged at 2.82 per share.

We believe these factors aided the shares of the company to move north. Notably, shares of the company have gained 11% over the past one month, outperforming the industry’s gain of just 1.5%.

To Conclude

Blackbaud outpaced the Zacks Consensus Estimate in the trailing four quarters, recording a positive average earnings surprise of 6.3%.

Further, it has a long-term expected EPS growth rate of 11.7%.

We expect the trend to continue and drive the overall financial performance of this Zacks Rank #3 (Hold) stock.

Key Picks

Few better-ranked stocks in the broader technology sector are NVIDIA Corporation NVDA, Micron Technology, Inc. MU and Western Digital Corporation WDC, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA, Micron and Western Digital have long-term earnings per share growth rate of 10.3%, 8.2% and 19%, respectively.

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