BlackBerry Upgraded By Macquarie Following Encouraging Earnings Report

Shares of

BlackBerry LtdBBRY

were trading lower by around 1 percent Monday morning despite the stock being upgraded by analysts at Macquarie Research.

Macquarie's Gus Papageorgiou upgraded BlackBerry's stock to Outperform from Neutral with a price target boosted to $9.00 from a previous $8.10. The analyst's upgrade also applies to BlackBerry's Toronto-listed stock with a price target increased to C$12 from a previous C$10.80.

Encouraging Earnings Report And Outlook

Papageorgiou noted that BlackBerry's reported revenue of $297 million in the fourth quarter exceeded his estimates by 8 percent. The analyst also highlighted a better-than-expected EBITDA margin and 28 percent revenue growth in the company's software business as other positives in the quarter.

Perhaps more notable, Papageorgiou pointed out that BlackBerry doesn't normally provide any guidance but its CEO John Chen acknowledged that the Street's expectations for a profit in 2018 is achievable. According to the analyst, this signals a "more stable business environment for the company." Blackberry Still A 2-3 Year Investment Story A Look At BlackBerry's Different Business Model

Papageorgiou also noted that BlackBerry's market share of "infotainment" technologies in the auto sector stands at more than half of the entire market. However, the company only generates around $1.00 to $1.50 per vehicle, but the company believes this figure can grow as high as $5 per vehicle.

Bottom line, the analyst acknowledged that there is still risk involved in BlackBerry's stock but said, "We believe the potential returns outweigh them."