Blackberry Still A 2-3 Year Investment Story

BlackBerry Ltd BBRY shares are surging higher by 12.5 percent on Friday after the company delivered a big fourth-quarter earnings beat and guided for profitability in 2018. BlackBerry delivered EPS of $0.04 in Q4 on revenue of $297 million.

A number of investors have written off BlackBerry in recent years, but Global Equities Research analyst Trip Chowdhry sees the BlackBerry turnaround coming. Earlier this month, Chowdhry called BlackBerry a strong potential “anti-trend play,” especially in light of President Donald Trump’s aggressive infrastructure spending plan.

Analyst Commentary

“BBRY can be the intelligent infrastructure system provider for the new collar industry, which we think could be 10 percent of [a] $200 billion infrastructure spend, or $20 billion,” Chowdhry wrote on March 16. New collar jobs are next-generation jobs that are a hybrid of blue collar (trade) jobs and white collar (professional) jobs.

Chowdhry believes the efforts of CEO John Chen to transition BlackBerry away from its history as a smartphone device maker and toward its future as a mobile security solutions company will pay off big for BlackBerry investors in the long term.

However, Chowdhry predicts BlackBerry’s transition is still two to three years from completion. In the meantime, he says quarterly earnings reports mean “nothing.”

If BlackBerry delivers on its new guidance come 2018, investors may not have to wait two years for the bullish thesis to play out.

Even after Friday’s big gain, BlackBerry shares are still down 47.0 percent in the past five years.

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