Piper Sandler has upgraded BlackLine, Inc. (NASDAQ: BL) to Neutral from Underweight, citing improving cloud fundamentals at SAP (SAP). The investment bank also raised its price target to $62 from $55, partly due to BlackLine’s partnership with the German enterprise software company.
BlackLine, headquartered in Los Angeles, offers cloud software that automates financial processes. The company’s partnership with SAP contributed to 25% of BlackLine’s sales last year. On Monday, SAP reported its first-quarter financial results, showing robust cloud backlog growth, which is likely to translate into accelerated growth for BlackLine.
Piper Sandler analysts, including Brent Bracelin, noted in a report that the acceleration in current cloud backlog growth to 28% (compared to 27% last quarter) on a €3B ($3.2B) year-over-year increase suggests healthy demand fundamentals for SAP cloud despite macroeconomic uncertainties.
SAP CEO Christian Klein stated during yesterday’s earnings call that current cloud’s backlog grew 28% to €14.2B ($15.15B). He emphasized that this represents the fastest growth on record and demonstrates the strong momentum across the company’s portfolio, with Business AI as an enabling factor that has already significantly impacted the Q1 backlog.
Klein also highlighted the collaboration with NVIDIA (NVDA) to develop new GenAI capabilities, underscoring the increasing adoption of AI in SAP’s cloud products.
Piper Sandler believes the partnership with SAP could drive incremental growth for BlackLine, surpassing its previous forecast of 9.2% this year and 9.5% next year. While Seeking Alpha analysts maintain a Buy rating for BlackLine, both Wall Street analysts and Seeking Alpha’s Quant system have assigned a Hold rating to the company.
