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Bank Of America: Further Downside In Blackberry 'Limited' After 40% Loss

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Bank Of America: Further Downside In Blackberry 'Limited' After 40% Loss

The bearish case for BlackBerry Ltd (NYSE: BB) can no longer be justified after the stock's 40% decline over the past year, according to BofA.

The Analyst

Bank of America analyst Daniel Bartus upgraded Blackberry's stock from Underperform to Neutral with a price target lifted from $6 to $7.

The Thesis

Blackberry is composed of five business units and the company is worth $5.05 per share under a bear case, $6.95 per share under a base case, and as much as $9.46 under a bull case, Bartus said. As such, the stock likely has support at the $5 level, which implies "limited" downside potential and the potential for "substantial upside."

Bartus said a bullish stance can't yet be justified as Blackberry remains a "show-me story" and better execution is needed moving forward. The company boasts some attractive assets, including Cylance, which is a leader in next-generation endpoint protection platforms. However, Cylance is suffering from three issues that need to be resolved, including acquisition uncertainty like sales turnover and a shift from endpoint protection to endpoint detection.

The QNX auto segment has lost some momentum recently but remains a leader in the lucrative auto software industry back by strong partnerships with leading chipmakers.

The Athoc business has "some potential" for a turnaround and could be seen as an "underappreciated" asset.

Blackberry's stock is trading valuation at 2.2 times 2021 EV/Sales versus peers that are mostly north of three times. The research firm's revised $7 price target is based on a peer consistent multiple of three times 2021 EV/Sales.

Price Action

Shares of Blackberry were trading higher by 2% at $5.61.

Related Links:

Analysts Mixed On BlackBerry Following 23% Drop

BofA: BlackBerry's Cylance Acquisition Excites, But There's No Fire In Spark Platform

Latest Ratings for BB

DateFirmActionFromTo
Nov 2019UpgradesUnderperformNeutral
Oct 2019ReiteratesUnderperform
Oct 2019Initiates Coverage OnNeutral

View More Analyst Ratings for BB
View the Latest Analyst Ratings

Posted-In: AtHoc Bank of America Cylance Daniel BartusAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

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