Market Overview

Despite BlackBerry's Q3 Beat, Analyst Urges Caution

Despite BlackBerry's Q3 Beat, Analyst Urges Caution
Related BB
The Week Ahead: Pepsi And Costco Earnings, Upwork IPO
46 Biggest Movers From Friday
BlackBerry Under John Chen's Leadership (Seeking Alpha)

BlackBerry Ltd (NYSE: BB) impressed investors with its earnings report, but some Wall Street analysts aren't ready to turn too bullish just yet.

The Analyst

BMO Capital Markets' Tim Long maintains a Market Perform rating on BlackBerry's stock with a price target boosted from $10 to $12.

The Thesis

BlackBerry's "strong" earnings report highlighted by better than expected revenue in both the software and legacy business and a margin and EPS beat, Long said in a note. The company encouragingly highlighted several key wins in the software business. At the same time, growth within the software business has proven to be "disappointing" and there is unlikely to be any near-term catalyst to "spur the business."

See Also: BlackBerry Delivers Q3 Beat: 'Our Momentum Continues'

Investors may want to consider staying on the sidelines on BlackBerry's stock as the "inflection point for growth" has yet to be made apparent, Long said. Overall, investors have reason to be "skeptical" on the handset software licensing business where revenue may "find a hard time" exceeded contractually requirement minimums and the Enterprise segment seems "stagnant." Accordingly, this places all of the pressure for BlackBerry to outperform in the automotive and asset tracking opportunities but through now any signs of revenue inflection has not yet been made apparent.

A $12 price target is based on a sum-of-the-parts analysis using a 5x multiple on the software business which is in-line with the company's comparable peers.

Price Action

Shares of BlackBerry were trading lower by around 2 percent Thursday morning.

Latest Ratings for BB

Oct 2018Raymond JamesMaintainsMarket PerformMarket Perform
Jun 2018Canaccord GenuityMaintainsHoldHold
Oct 2017Canaccord GenuityMaintainsHold

View More Analyst Ratings for BB
View the Latest Analyst Ratings

Posted-In: BlackBerry Software BMO Capital Markets Tim LongAnalyst Color Price Target Top Stories Analyst Ratings Best of Benzinga


Related Articles (BB)

View Comments and Join the Discussion!
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

KeyBanc: E.L.F. Beauty Is Attractive, But Shares Are Too Pricey

Why Apple Remains Morgan Stanley's Top Pick For 2018