Blackbaud: This Story Is Souring Quickly (Rating Downgrade)

Nov. 28, 2024 10:13 AM ETBlackbaud, Inc. (BLKB) Stock
Gary Alexander profile picture
Gary Alexander
29.51K Followers
(10min)

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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Gary Alexander profile picture
29.51K Followers
With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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