What changed: Needham lowered its price target on Backblaze Inc. (NASDAQ:BLZE) to $6.00 from $8.00 and preserved a Buy rating. The broker attributed the lower target to compressed valuation multiples across the software sector rather than an abrupt change in Backblaze's operating fundamentals.
Current market context: With the stock trading at $4.37, Needham's adjusted target implies potential upside from current levels. Other analyst targets referenced in the coverage range from $7.50 to $15.90, indicating substantial dispersion in expectations among sell-side firms.
Operational performance and guidance: Needham flagged that B2 Cloud growth fell short of the company provided guidance. The firm noted investors are becoming more attuned to the revenue mix and specifically to the contribution from large, variable-usage customers and how those customers can affect topline volatility.
The brokerage also welcomed a change in management approach that removes large, swing-factor deals from the company outlook. Needham sees this shift in disclosure and forecasting as improving Backblaze ability to execute and reducing volatility around reported expectations.
Profitability outlook: Needham indicated that Backblaze projection for profitability in 2026 comes in slightly below consensus. Management attributes part of this miss to an expected headwind of roughly 200 basis points driven by higher data center and equipment costs.
Separately, InvestingPro analysis referenced in coverage notes the stock is currently undervalued and that analysts collectively expect the company will deliver profitability this year despite these near-term cost pressures.
Recent wins and financials: Backblaze announced a $15 million, three-year total contract value agreement to white-label storage for a leading neocloud provider. In earnings reported for Q4 2025, the company posted a notable beat: EPS of $0.06 versus a $0.01 consensus estimate, and revenue of $37.8 million compared with expectations of $37.59 million.
Other analyst views: Citizens reiterated a Market Outperform rating with a $8.00 price target. That firm cautioned that shares could face near-term pressure but highlighted growth in cloud storage as a constructive factor for the company's outlook.
Share-price movement: The stock has declined 46.8% over the last six months, a pullback Needham and others attribute in part to broader sector pressures that have compressed multiples for software names.
Conclusion: Needham trimmed its target to $6 primarily in response to valuation compression across software, while retaining a favorable stance on the company operations. The firm pointed to clearer guidance practices and a material contract win, but also flagged margin pressure from rising infrastructure costs that could delay consensus profitability targets.