Amid sky-high stock markets, what has become evidently clear during the Q3 earnings season is that not all companies are thriving fundamentally, despite record share prices. In fact, both enterprise companies and consumer companies are facing challenges: the former is challenged by
Blackbaud: This Story Is Souring Quickly (Rating Downgrade)
Summary
- I'm downgrading Blackbaud to a sell rating, especially as weaker ESG activity impacts the company's EVERFI division.
- Q3 results showed decelerating revenue growth, and in my view, trends are likely to worsen in FY25 as the company laps its pricing actions this year.
- The company’s aggressive buyback program is unsustainable due to insufficient cash flow and high debt levels, raising concerns about future financial stability.
- Blackbaud isn't expensive, but neither is it a value stock at ~18x P/E and ~22x FCF.
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