BlackBerry Stock Turns Red Despite Beating Earnings Estimates
BlackBerry shares slumped on Wednesday despite the cybersecurity company reporting better-than-expected earnings and revenue in the fiscal third quarter, largely driven by solid sequential billings and revenue growth for both the Internet of Things and Cybersecurity businesses.
The Waterloo, Ontario-based company’s adjusted earnings were break-even a share, better compared to the market expectations of a loss of $0.7 per share. The company said its revenue slumped to $184 million from $218 million a year ago. Still, that was above the Wall Street consensus estimates of $177.25 million.
BlackBerry said its cybersecurity revenue for the third quarter of fiscal 2022 was $128 million and expects it to be in the range of $125 million and $135 million in the fourth quarter, with a gross margin of 59% and ARR of $358 million. Licensing and other revenue for the third quarter of fiscal 2022 were $13 million, which also beat expectations.
The U.S. listed BlackBerry stock fell nearly 6% to $8.71 on Wednesday. It soared nearly 40% so far this year.
Executive Comments
“This quarter BlackBerry delivered solid sequential billings and revenue growth for both the IoT and Cybersecurity businesses, beating expectations for the second consecutive quarter. We also beat expectations on earnings, despite the ongoing investment to drive future top-line growth,” said John Chen, Executive Chairman & CEO, BlackBerry.
“In IoT our QNX business achieved a quarterly record for design-related revenues, performing stronger than expected despite ongoing industry supply chain headwinds. On the Cybersecurity front, we saw further traction for our recent unified endpoint security product launches with additional head-to-head wins against other next-gen players. I am excited about how the current organization is executing to take advantage of the market opportunities.”
Analyst Comments
“We’re maintaining our $7 fair value estimate for no-moat BlackBerry after the firm reported fiscal third-quarter earnings modestly above our expectations and guided for fiscal fourth-quarter results modestly below our prior forecast. We’re pleased to see steady sequential growth for BlackBerry’s software and services sales through fiscal 2022 thus far, but we view cybersecurity and Internet of Things revenue trending below the firm’s initial fiscal year guidance as disappointing, even despite headwinds in its QNX auto business,” noted William Kerwin, equity analyst at Morningstar.
“We still expect robust growth from BlackBerry’s QNX auto sales, and nonetheless view continued design win acceleration as positive in the long term. Even after a small pullback following the release, we continue to view shares as overvalued.”
BlackBerry Stock Price Forecast
Four analysts who offered stock ratings for BlackBerry in the last three months forecast the average price in 12 months of $8.82 with a high forecast of $10.00 and a low forecast of $7.50.
The average price target represents a -4.65% change from the last price of $9.25. Of those four analysts, none rated “Buy”, one rated “Hold” while three rated “Sell”, according to Tipranks.
A few analysts have updated their stock outlook. TD Securities lowered the target price to $8.50 from $9. CIBC cut the price objective to $10 from $11.
Technical analysis suggests it is good to sell now as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong selling opportunity.
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This article was originally posted on FX Empire
