BlackBerry is still a pass, says RBC Capital Markets

RBC Capital Markets analyst Paul Treiber is holding steady on his rating for BlackBerry (BlackBerry News, Stock Quote, Chart TSX:BB), while at the same time noting that the risk-reward profile is looking better for the stock.

On Tuesday, Treiber reiterated his “Sector Perform” rating and C$9.00 target price, which represented a 12-month return of negative 1.7 per cent at the time of publication.

Treiber says that while BlackBerry management saw its recent fiscal first quarter results as healthy, the company should earn a higher multiple going forward from its enterprise software and services segment as well as its BlackBerry Technology Solutions and cybersecurity business through its Cylance subsidiary.

He adds that BlackBerry management is currently “frustrated with the stock”.

BlackBerry’s share price has been on a slide since early April, with the stock now sitting down 5.7 per cent year-to-date. The software and security company posted its first quarter fiscal 2020 financials on June 26, coming in with revenue of $267 million, a touch better than the consensus expectation of $265 million and fully diluted EPS of $0.01 per share, in line with the Street’s estimate.

CEO John Chen called the quarter a good start to the company’s fiscal 2020.

“We are ahead of our schedule in our Cylance integration, while investing in the right opportunities to drive long-term growth and profitability for BlackBerry. Customers are looking forward to our robust product cycle this year, with over 30 new secure communication products and services to be released,” said Chen in a press release.