Wall Street Upgrades Backblaze, But Earnings Still Bleed

Forward-Looking Analysis

Wall Street analysts have recently increased their optimism regarding Backblaze’s performance, evidenced by multiple price target hikes and rating upgrades. B. Riley Financial raised its target from $7.00 to $16.00 with a "buy" rating, while Craig Hallum upgraded the stock from "hold" to "buy," also setting a $16.00 target. Lake Street Capital raised its target to $14.00 with a "buy" rating, and Citizens JMP increased its objective to $16.00 with a "market outperform" rating. Conversely, Weiss Ratings downgraded the stock to a "sell (e+)" rating. The consensus among the eight covering analysts is a "Moderate Buy" rating with an average price target of $13.21. Regarding financial metrics, equities research analysts expect Backblaze to post an EPS of -$0.37 for the current fiscal year. This negative EPS estimate contrasts with the recent positive momentum seen in the stock, which rose 8.6% to trade around $13.71, supported by strong institutional buying activity, including significant stake increases by Royal Bank of Canada and new positions from ProShare Advisors LLC and Oxford Asset Management LLP.

Historical Performance Review

Backblaze delivered solid results in its 2026Q1 report, beating top-line and bottom-line expectations. The company generated revenue of $38.67 million, surpassing analyst estimates of $37.78 million. Gross profit reached $23.53 million, reflecting healthy margins despite a net loss of $6.15 million. Earnings per share (EPS) came in at -$0.10, significantly outperforming the consensus estimate of -$0.02. This beat demonstrates the company's ability to drive revenue growth while managing costs, although it continues to operate with a negative net margin of 14.97% and a negative return on equity of 20.54%.

Additional News

Institutional sentiment toward Backblaze has shifted positively, with hedge funds and institutional investors increasing their holdings. Royal Bank of Canada expanded its stake by 1,388.2% in the fourth quarter, now holding 5,551 shares valued at approximately $26,000. ProShare Advisors LLC and Oxford Asset Management LLP each acquired new stakes valued at roughly $47,000 during the same period. M&T Bank Corp also purchased a new position valued at about $49,000. Additionally, Occudo Quantitative Strategies LP initiated a new position in the second quarter worth approximately $58,000. These moves contribute to institutional investors and hedge funds now owning 54.03% of the company's stock, indicating growing confidence among professional money managers in Backblaze's long-term potential within the cloud storage infrastructure sector.

Summary & Outlook

Backblaze exhibits a robust revenue growth trajectory, evidenced by its Q1 beat, though it remains in a pre-profitability phase with negative net margins and ROE. The primary catalyst for future upside is the strong consensus among major Wall Street firms, with four analysts recently upgrading ratings or raising price targets to between $14.00 and $16.00. This bullish sentiment is reinforced by significant institutional accumulation, suggesting that professional investors view the current valuation as attractive relative to growth potential. However, the single "sell" rating from Weiss Ratings and the negative EPS forecast for the full year introduce downside risk. Overall, the outlook is cautiously bullish, driven by analyst upgrades and institutional support, but contingent on the company's ability to translate revenue growth into sustained profitability.