On Monday, Blend Labs Inc. (NYSE:BLND) stock received an upgrade from Canaccord Genuity, moving from a Hold to a Buy rating. The firm also raised the price target for the company's shares to $4.75, up from the previous target of $3.00. The change in rating and price target reflects a more optimistic outlook on the company's prospects, particularly in the mortgage market.
The analyst from Canaccord Genuity noted the improved risk/reward balance for Blend Labs and the potential early signs of a turnaround in the mortgage market as reasons for the upgrade.
Despite acknowledging the possibility of being premature in predicting a sustainable increase in mortgage volumes, the analyst highlighted the company's significantly expanded mortgage service offerings since the market downturn.
Blend Labs has also made strides in cleaning up its balance sheet. There is a strong likelihood that the company will achieve non-GAAP profitability in the fourth quarter of the current fiscal year.
These factors are seen as providing the company with additional time to capture an increase in mortgage volumes, should it take longer than anticipated.
The firm's revised price target is based on an updated evaluation of Blend Labs' operating model and reduced perceived risks. The new target of $4.75 is set at 6.1 times the firm's 2025 EV/Sales estimate, marking an increase from the previous valuation multiple of 3.6 times. This adjustment reflects a more confident view of the company's growth trajectory and financial performance moving forward.
In other recent news, Blend reported a total revenue of $34.9 million in Q1 and anticipates non-GAAP operating profitability by Q4 of 2024. Blend also benefitted from a $150 million investment from Haveli.
In addition, Blend announced the appointment of Bryan Sullivan and Eric Woersching to its Board of Directors, aiming to leverage their extensive experiences in consumer lending, identity intelligence, and advising high-growth software companies.
Blend also anticipates inclusion in the Russell 2000 Index starting July 1, 2024, which is seen as a reflection of its market capitalization and performance. This development was positively viewed by Blend's Head of Finance and Administration, Amir Jafari.
Furthermore, Blend has launched services with Navy Federal Credit Union and signed a seven-digit contract with another top 10 credit union. Analyst firm Keefe, Bruyette & Woods raised its price target for Blend Labs to $3.00 from $2.65, maintaining a Market Perform rating, citing the company's potential in a possible mortgage market rebound and continued progress in consumer banking. These are the recent developments in Blend's business landscape.
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