BlackBerry (BB) Stock Up 9% After Good FQ2, Analysts' Reaction Mixed

September 23, 2021 6:13 AM EDT
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Price: $11.52 --0%

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    1 Buy, 4 Hold, 3 Sell

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    Up: 5 | Down: 15 | New: 28
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BlackBerry (NYSE: BB) stock price is up over 9% in pre-open Thursday after the company reported better-than-expected FQ2 results.

BlackBerry reported Q2 EPS of negative $0.06 to beat the analyst estimate calling for a negative $0.07. Revenue for the quarter came in at $175 million versus the consensus estimate of $163.5 million. The company also maintained its guidance of $495 million.

"Revenue for all businesses beat expectations this quarter. The Cyber Security business unit delivered robust sequential billings and revenue growth and the IoT business unit performed well in the face of global chip shortage pressures," said John Chen, Executive Chairman & CEO, BlackBerry.

Global Equities Research analyst Trip Chowdry believes the best is yet to come for BB as IVY Platform is progressing extremely well, among other things.

“BlackBerry's Ivy platform is a standardized way to read vehicle sensor data and analyze it for personalized in-vehicle services. It is built on BlackBerry's QNX platform, its safety-certified embedded OS, as well as AWS' portfolio of IoT and machine learning capabilities,” Chowdry explained in a note sent to clients.

The analyst sees solid long-term fundamentals and reiterated a $20.00 per share price target.

RBC analyst Paul Treiber isn’t as positive as Chowdry as he reiterated an Underperform rating and a $7.50 per share price target. Treiber says that the multiple is below peers given BlackBerry’s lower growth and reduced visibility.

“The negotiations for the sale of BlackBerry’s patents have been largely finalized (including price) and management sees 80% probability of closing within one quarter. The patent sale significantly above/below expectations (~$1B) is likely to have a material impact on the stock. For Q2, headline revenue was slightly above expectations on non-recurring revenue, whereas recurring revenue was below expectations,” Treiber said in a client note.

“We believe that the valuation re-rating in BlackBerry’s shares (5.5x FTM EV/S, up from 2.5x last year) is not aligned with the company’s fundamentals. Additionally, the outcome of the patent sale is difficult to forecast.”

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