Blackline's Long-Term Growth Prospects Are Above Average

Baird has started coverage of Blackline Inc BL with an Outperform rating and $33 price target, citing the company’s above-average long-term growth prospects.

Blackline provides a cloud-based software platform to automate and streamline accounting and finance operations.

“Specifically, BlackLine “automates” portions of the financial close process (i.e., closing the books), freeing up valuable accounting resources which produces a hard-dollar cost savings,” analyst Steven Ashley wrote in a note.

This offers revenue visibility and ensures that a significant part of the BlackLine ROI is tangible, “something rare and powerful in the software world.”

The automation of financial closing process sets Blackline apart from its bigger rivals such as salesforce.com, inc. CRM, Workday Inc WDAY, The Ultimate Software Group, Inc. ULTI and athenahealth, Inc ATHN as these vendors do not automate business processes.

Moreover, BlackLine integrates with multiple ERP systems to automate accounting processes across disparate systems. The recommendation of BlackLine by SAP SE (ADR) SAP as the financial close tool of choice for its customers speaks volumes about the company and its products.

“The compelling value proposition of BlackLine’s product offering manifests as strong performance metrics, including: 1) best-in-class renewal rate of 98%; 2) dollar renewal values of 120%; 3) a mind-numbing NPS (net promoter score) of 78; and 4) gross margins of 80%,” Ashley highlighted.

BlackLine has 1,500 customers, about 1 percent of its target market of 165,000 organizations worldwide with $50 million or more in revenue.

At last check, shares of Blackline fell 3.68 percent to $26.73. The $33 price target represents a potential upside of 19 percent over Monday’s close of $27.75.