As the technology sector grapples with shifting investor sentiment, smaller software companies are capturing attention with their resilience and growth potential. Blackline Inc.'s (NASDAQ:BL) performance could improve meaningfully in the back half of the year, according to Raymond James.

• BL is gaining ground. Track it now here.

The Blackline Analyst: Analyst Alexander Sklar upgraded the rating to “Outperform” while maintaining the price target at $67.

The Blackline Thesis: Sentiment in the application software segment has been mixed following the earnings releases by large cap companies, Sklar said in the upgrade note.

Check out other analyst stock ratings.

Could Vertical Software Companies Lead The Charge?

Among the smaller-cap software companies, vertical names have outperformed on average due to "the perception they deliver more consistent growth and have a higher degree of defensibility against AI," he added.

Blackline is among the companies in the sector whose likelihood of upside revisions is the highest, for both the back half of the year and 2026, which can "demonstrate accelerations in growth and bookings," the analyst stated.

The Surprising Growth Potential For Blackline

For Blackline, there is the "potential for a narrative shift to occur over the coming quarters coincident with improved bookings and profitability support," he further wrote.

BL Price Action: BlackLine shares were up 0.99% at $56.25 at the time of publication on Tuesday, according to Benzinga Pro data.

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