BLND - Blend Labs: Good Trends But The Growth Has To Keep Going
2024-03-06 22:09:58 ET
Summary
- Blend Labs, a software provider for the banking industry, has seen its shares double and is worth a second look.
- While historically reliant on providing software solutions to ease mortgage lending, Blend Labs has been hurt by weakness in housing and is diversifying its software offerings for banks.
- However, in spite of reductions in revenue due to the slow mortgage market, gross margins have shown resilience, and the growth profile looks promising.
I took my first look at the banking software provider Blend Labs back in July 2023, viewing it then as having a lot to prove in terms of growth in a challenging environment for its core software product, which helps banks originate mortgages more efficiently. Turns out I missed a great opportunity to buy in, as shares have doubled since then, making it worth a second look in my view. Ultimately, I still believe it is a hold on a fundamental basis due to needing to hit high-growth benchmarks while keeping operating expenses in check. However, there are positive signs emerging that the growth targets are achievable, the cost containment is moving in the right direction, and it could be a suitable buy in a portfolio accommodating high-risk tolerance with a long-term horizon....
Blend Labs: Good Trends, But The Growth Has To Keep Going