Can BlackBerry (BB) become the stock market’s Liverpool FC? For anyone following the English Premier League, after 30 barren years and one global pandemic, soccer giants Liverpool finally clinched the premier league title last week. Might the maker of the once iconic smartphone be able to also rekindle former glories?
Since leading the handset market and peaking at an all-time high of $147.55 per share – all the way back in June 2008 – the landscape has irrevocably changed. BlackBerry has changed direction since and is now ostensibly a security software specialist. The share price has changed direction too, down now in penny stock territory, with another disappointing year in tow – shares have dropped by 25% in 2020.
The former glories will be hard to replicate, and although last week’s Q1F2021 earnings report was a step in the right direction, the results were still a mixed bag.
In the quarter, BlackBerry’s revenue declined year-over-year by 20% to $214 million, lower than the Street’s call for $216.8 million. The company managed a beat on the bottom line, with Non-GAAP EPS of $0.02 beating consensus by $0.04.
As expected, the quarter was marred by the ruinous effect of the coronavirus. Auto market macro headwinds translated into weak sales for the company’s QNX auto software platform. Although ESS (enterprise software and services) managed to offset QNX weakness due the remote working environment. BlackBerry has noted the auto and other embedded sectors are witnessing improving trends and expect sales for QNX to pick up as the year progresses.
So does Canaccord’s Michael Walkley. Although the 5-star analyst anticipates “steady improvement throughout the year,” there is still much to be done to change overall sentiment.
Walkley said, “While management has created a cogent long-term strategy and the shares are potentially compelling for longer-term-oriented investors, we await more proof in execution on the new product roadmap, evidence cross-selling opportunities emerge, stabilizing to growing ESS sales, recovering QNX sales, and the potential for upside to our estimates before becoming more constructive on the shares.”
All in all, Walkley reiterated a Hold on BlackBerry shares, along with a $6 price target. The implication for investors? Upside of 23%. (To watch Walkley’s track record, click here)
The rest of the Street backs up Walkley’s call. All 9 analysts tracked over the last 3 months recommend a Hold. With an average price target of $5.38, the analysts forecast upside of 10% over the next 12 months. (See Blackberry stock analysis on TipRanks)
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