Dollar edges higher ahead of Fed rate decision; euro slips slightly
On Monday, Canaccord Genuity adjusted its price target for Blend Labs (NYSE:BLND) shares, reducing it to $5.25 from the previous target of $5.75, yet affirming a Buy rating on the company’s stock. Currently trading at $3.13, the stock sits between analyst targets ranging from $3.50 to $7.00. The adjustment follows a review of Blend Labs’ fourth-quarter performance, which revealed several positive developments for the company, despite a challenging market environment where the stock has declined 25% year-to-date.
Blend Labs achieved a new partnership with another top ten bank, as well as securing multiple other agreements in the fourth quarter, indicating sustained interest in the company’s offerings. The reported obligations (RPO) saw a 15% sequential increase, bolstered by strong renewals and expansions. With revenue growing at 3.3% and a strong gross profit margin of 56%, the company shows promising fundamentals. Additionally, Blend Labs has been actively broadening its product suite, with the introduction of Rapids—Rapid Refi and Rapid Home Equity—now in full production, which are anticipated to significantly benefit both Blend and its mortgage lending clients. For deeper insights into Blend Labs’ growth potential and comprehensive analysis, check out the detailed research available on InvestingPro.
The company also experienced a growing adoption of its commercial banking suite, which not only diversifies Blend Labs’ reliance on mortgages but also cultivates a new customer base that may potentially be interested in mortgage-related services. The company maintains a strong financial position with a current ratio of 3.47, indicating ample liquidity to meet short-term obligations. Another positive development mentioned was the termination of the Mr. Cooper put right on the Title business, which has removed a potential obstacle for investors.
Moreover, Blend Labs has demonstrated a positive free cash flow (FCF) in its profit and loss statement, a trend that is expected to continue moving forward. While currently not profitable, analysts predict profitability this year with an EPS forecast of $0.05 for FY2025. The price target reduction to $5.25 is attributed to a downward revision of forward estimates by Canaccord Genuity, while the valuation multiple applied by the firm remains unchanged. Get access to more detailed financial metrics and 8 additional ProTips for Blend Labs on InvestingPro.
In other recent news, Blend Labs reported a 15% year-over-year increase in total revenue for the fourth quarter of 2024, reaching $41.4 million, slightly surpassing the forecast of $41.38 million. The company achieved non-GAAP operating profitability of $5.2 million, indicating solid financial growth despite a challenging mortgage market. However, UBS revised its price target for Blend Labs, lowering it to $3.50 from $4.00, while maintaining a Neutral rating on the company. This adjustment followed Blend Labs’ recent earnings report and conference call.
The company also launched new AI-driven financial solutions, demonstrating its adaptability and focus on innovation. Free cash flow improved significantly but remained negative at -$7.2 million, reflecting ongoing challenges. Blend Labs forecasts Q1 platform revenue between $25 million and $27 million, representing a 9% year-over-year growth. The company aims for positive free cash flow in Q1 and targets a positive Rule of 40 for its platform segment by year-end. These recent developments highlight Blend Labs’ strategic focus and financial performance amidst a complex economic environment.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.