BlackBerry: Canaccord Downgrades To Sell After 50% Run

On June 24th, BlackBerry (TSX: BB) reported its first quarter financial results. The company reported revenues of C$234 million, up from C$210 million last quarter. The company generated C$54 million in operating profits with earnings per share of ($0.05). The stock is closed the day down 4.5% yesterday following the financial results.

Multiple analysts downgraded BlackBerry after the results, with the consensus 12-month price target falling to U$8.90. BlackBerry only has 5 analysts covering the name, with 1 analyst having a hold rating, 3 having sell ratings and 1 analyst has a strong sell rating. The street high sits at U$10 while the lowest sits at U$7.50.

In Canaccord’s note, they downgrade BlackBerry to a sell rating from hold but reiterate their U$10 price target, saying that the recent and sharp rise in share price has made them move their rating. Canaccord’s consensus around the corner seems to be mainly bullish, saying, “We believe software and services fundamentals should improve throughout F2022.”

Canaccord also sees a longer-term opportunity with the partnership with AWS, giving them the ability to access and analyze vehicle data for third-party use. The joint venture sees AWS and BlackBerry splitting revenue, but Blackberry will own all the relationships/customers. The product is expected to be released in 2023 and will be subscription-based.

For the quarter, Canaccord calls it a solid quarter with revenue coming in 2% above their estimates thanks to IoT revenue coming in higher than estimates, while Cybersecurity and licensing revenue came below Canaccord’s estimates. Total ARR declined from fourth-quarter levels primarily due to QNX royalties but QNX is expected to recover during 2021 and 2022. They write, “We believe management has created the building blocks to reach double-digit longer-term growth with its portfolio of new security products combined with recovering QNX sales.”

Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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