Trade BlackBerry but don’t hold the stock, this fund manager says

BlackBerry (BlackBerry Stock Quote, Chart TSX, NYSE:BB) wowed investors with its last earnings report which saw the Canadian tech company post top and bottom line consensus beats. But not everyone is convinced that BB’s years-in-the-making turnaround has remade the former phone maker into a software success story.

Count Darren Sissons of Campbell Lee & Ross among the skeptics, as the portfolio manager says that there are better tech names out there.

“[BlackBerry] has effectively become a software company with security. Recently, the numbers have been okay,” says Sissons, to BNN Bloomberg on Thursday. “At these levels, I think there’s a trade here. I think [CEO] John Chen has done pretty well with it. But for us it wouldn’t be a core holding. I think there are better technology places to go to, so we’d probably pass on this.”

BlackBerry reported its fourth quarter and fiscal 2019 financials at the end of March, beating analysts’ forecasts for revenue with a $255-million top line which was an improvement over $233 million and a nine-per-cent year-over-year growth rate. (All figures in US dollars.) That came with a profit of 11 cents per share on an adjusted basis, also higher than the six cents per share estimate from the street. For the year, BlackBerry’s revenue was $904 million and its earnings were $95 million, both of which were lower than the previous year.

“We delivered on all of our fiscal 2019 financial commitments and created a solid foundation for continued profitable revenue growth in fiscal 2020,” said Chen in a press release. “I am pleased to note that BlackBerry is recognized as a $1 billion plus revenue company in security software. The combination of BlackBerry Cylance’s lightweight AI and machine learning cybersecurity capabilities with BlackBerry Spark, our secure communications platform, will make our endpoint management and embedded software products stronger and more essential for enterprises to generate value from the Internet of Things.”

The market reacted positively to BlackBerry’s fourth quarter, briefly boosting the stock to the low $10.00 range and adding to an impressive run that began in late December when BB’s share price was as low as $6.57. Currently, the stock is trading in the low $9.00 range and is up about 27 per cent year-to-date.