Analyst Note| Dan Romanoff, CPA |
Wide-moat Blackbaud reported strong fourth-quarter results for revenue and adjusted EPS relative to investor expectations, exceeding FactSet consensus estimates. Given the heightened uncertainty, management’s outlook included both upside and downside scenarios along with its base case of $900 million in revenue for 2021. The key swing factors are transactional revenue and bookings, which management noted were strong in January. While we expect Blackbaud’s revenue to see continued pressure in 2021, particularly from headwinds arising from the 2020 bookings shortfall, we view the shift to online giving and increasing digitalization across its end markets as long-term value-driving opportunities. Further, we are encouraged by increasing retention rates, even during the pandemic, and strong margin performance in the quarter. As a result, we are raising our fair value estimate to $81 per share from $70 and view shares as about fairly valued.