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BlackBerry Ltd (NYSE:BB) reported light first-quarter revenue while still delivering an earnings beat.
The company’s QNX auto software segment came under pressure due to a slowdown in auto production, while the traditional Enterprise segment remained flat, according to BofA Securities.
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The BlackBerry Analyst
Daniel Bartus maintained a Neutral rating on BlackBerry with an unchanged $5.50 price target.
The BlackBerry Thesis
BlackBerry’s low organic growth and the risks associated with its exposure to highly competitive markets are reflected in the stock valuation, Bartus said in a Thursday note. (See his track record here.)
The company reported mixed first-quarter results, with revenue of $214 million missing the Street estimate of $215.3 million.
Despite gross margins coming in weaker than expected, operating margins outperformed due to a 26% decline in BlackBerry’s sales and marketing spend, the analyst said.
The QNX auto software segment was hurt by a slowdown in royalties that accrue to BlackBerry upon auto production and pauses in key partner projects, he said.
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BofA estimates that QNX sales have declined as much as 55%, Bartus said.
BlackBerry indicated the traditional enterprise segment was roughly flat.
The AtHoc crisis communications segment has growth potential due to COVID-19 and BlackBerry offering it as a managed service, the analyst said.
Bartus also expects Cylance to return to growth, as it is also now being delivered as a managed service and with new added endpoint detection and response capabilities.
BB Price Action
Shares of BlackBerry ended Thursday's session down 1.42% at $4.85.
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Photo courtesy of BlackBerry.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.