Citi maintains BlackLine stock Buy rating, $73 target

On Monday, Citi reaffirmed its Buy rating on BlackLine shares (NASDAQ:BL) with a price target of $73.00. Currently trading at $60.46, InvestingPro analysis indicates the stock is slightly undervalued. Citi's analysis suggests that the market's current view of BlackLine may be too pessimistic, particularly regarding the anticipation of a potential downward guidance for the year. The firm's analysts argue that the company's fundamentals strengthened in the fourth quarter, citing several key developments.

The expanded partnership with SAP, the introduction of new products and packaging, and recent changes to the go-to-market strategy are expected to bolster growth and improve customer retention in the coming year. With a robust gross profit margin of 75.31% and revenue growth of 11.39%, these factors, in conjunction with positive pre-announcement for the fourth quarter, mitigate the risk of disappointing earnings, according to Citi.

BlackLine is set to release its Q4 earnings report around mid-February, and Citi anticipates that the results will validate their positive stance. The firm notes that investor sentiment is currently negative, as indicated by the high number of days to cover in BlackLine's financial coverage.

Further supporting Citi's outlook, conversations with partners have indicated an uptick in deal momentum during the fourth quarter, which appears to be carrying over into the first quarter. Additionally, an analysis of web traffic trends has revealed a shift from negative to positive year-over-year growth in user numbers during the fourth quarter, reinforcing Citi's confidence in BlackLine's performance. With BlackLine's earnings report scheduled for February 13, InvestingPro subscribers can access 11 additional investment tips and comprehensive financial analysis to make informed decisions ahead of the announcement.

In other recent news, BlackLine Inc. has seen several significant developments. The company recently appointed Stuart Van Houten as its new Chief Commercial Officer and Philippe Omer Decugis as Senior Vice President and General Manager for Europe. These appointments come as part of BlackLine's strategic growth and innovation efforts. The company also announced a $200 million stock buyback program, aimed at enhancing shareholder value.

BlackLine exceeded its third quarter revenue and profitability guidance for 2024, with total revenue increasing by 10% year-over-year to $166 million, and Non-GAAP net income rising by 17% to $44 million. The company also introduced product innovations, including a new reconciliation solution and advanced AI-powered analytics, set to launch in 2025. Furthermore, BlackLine's migration to Google (NASDAQ:GOOGL) Cloud is over 80% complete, enhancing product development and AI capabilities.

The company raised its full-year 2024 revenue guidance to a range of $651 million to $653 million, with the Non-GAAP operating margin projected to be between 19.4% and 19.6%. These updates represent recent developments in BlackLine's ongoing operations and strategic initiatives. Piper Sandler, however, maintained a neutral rating on BlackLine, indicating that a significant turnaround could be several quarters away.

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