On Friday, Oppenheimer adjusted its outlook on Backblaze Inc (NASDAQ:BLZE) shares, reducing the price target to $10 from the previous $11, while maintaining an Outperform rating on the stock.
This change follows Backblaze's second quarter earnings for the fiscal year 2024, which surpassed expectations and prompted the company to raise its guidance for the full year.
Backblaze's performance in the second quarter was bolstered by robust demand for its B2 cloud storage platform, as well as recent price hikes.
The company's management also pointed out an increase in larger customer accounts, with a significant year-over-year growth in customers spending over $50,000 in annual recurring revenue (ARR).
The rise in demand for Backblaze's services led to a 44% year-over-year increase in B2 Cloud Storage ARR and a similar 43% growth in revenue. Looking forward, the firm remains optimistic about Backblaze's growth prospects.
Key growth drivers identified include a greater uptake of the platform for artificial intelligence applications, success in securing upmarket customers, enhanced contributions from channel partnerships, and benefits from price increases in Computer Backup services.
In response to the company's performance and updated guidance, Oppenheimer has revised its estimates. The reduction in the price target to $10 is attributed to market multiple compression, a factor that affects the valuation metrics used to determine stock price targets. Despite the lowered target, the firm's Outperform rating indicates a continued positive outlook on Backblaze's stock performance.
InvestingPro Insights
As investors digest the revised price target from Oppenheimer for Backblaze Inc (NASDAQ:BLZE), a closer look at recent InvestingPro data and tips may provide additional context. Notably, two analysts have revised their earnings upwards for the upcoming period, reflecting optimism about the company's future performance. However, it's worth mentioning that the stock has experienced significant pressure, with a notable decline over the past week and the last six months, indicating that investor sentiment has been affected by broader market trends or company-specific challenges.
InvestingPro data reveals a mixed financial picture for Backblaze. The company's market capitalization stands at $215.23 million, and while it has a negative P/E ratio of -3.79, indicating that it is not currently profitable, the revenue growth for the last twelve months as of Q1 2024 is a robust 21.93%. This growth is in line with the company's reported increase in B2 Cloud Storage ARR and revenue. However, short-term obligations exceeding liquid assets and a lack of dividend payments to shareholders suggest that the company is in a phase of reinvestment and potential financial tightening.
For those considering an investment in Backblaze, InvestingPro offers additional insights. There are more tips available on the platform, providing an in-depth analysis that can help investors make informed decisions. The current InvestingPro Fair Value estimate for BLZE is $5.5, which is below the stock's previous close price, suggesting that investors should exercise caution and consider the company's growth prospects alongside its financial stability.
To explore these insights further, investors can visit InvestingPro for additional tips related to Backblaze's stock performance and financial health.
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