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BlackBerry (BBRY) Up 34.4% Since Earnings Report: Can It Continue?

It has been about a month since the last earnings report for BlackBerry Limited BBRY. Shares have added about 34.4% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Fourth-Quarter Results

BlackBerry posted fourth-quarter fiscal 2017 (ended Feb 28, 2017) loss (on an adjusted basis) of $0.01 per share, narrower than the Zacks Consensus Estimate of a loss of $0.04 and also the year-ago loss of $0.06 per share. Lower costs boosted the bottom-line performance.

Results in Detail

Total revenue in the reported quarter was $286 million, down 38.36% year over year. The top line also missed the Zacks Consensus Estimate of $294 million.

Segment-wise, Software and Services licensing generated approximately 64% of the revenues, while Mobility Solutions contributed 28%. Services access fees revenues accounted for the balance. The company had more than 3,500 enterprise clients in the reported quarter.

Geographically, North America contributed 58% to the total revenue. Europe, the Middle East and Africa accounted for 29%. Similarly, the Latin America and the Asia-Pacific regions generated 1.8% and 11.2%, respectively, of the total revenue in the quarter.

Quarterly operating loss (on a reported basis) came in at $57million. The company had reported a loss of $223 million in the year-ago quarter. Operating expenses declined significantly on a year-over-year basis. The company exited fiscal 2017 with cash and cash equivalents of $734 million compared with $957 million at the end of fiscal 2016. Long-term debt in fiscal fourth quarter stood at $591 million as against $1.28 billion in the previous year-end quarter.

Outlook

BlackBerry expects its software business to either outperform or at least perform at par with the overall market in fiscal 2018. The company anticipates profitability (on an adjusted basis) in fiscal 2018. It also expects to generate positive free cash flow in fiscal 2018.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There have been two upward revisions for the current quarter. In the past month, the consensus estimate shifted upward by 52.3% due to these changes.

BlackBerry Limited Price and Consensus

 

BlackBerry Limited Price and Consensus | BlackBerry Limited Quote

VGM Scores

At this time, BlackBerry's stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. Charting a somewhat similar path, the stock was allocated a grade of 'F' on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.

The stock is suitable solely for growth based on our styles scores.

Outlook

Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.


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