BlackBerry’s stock is “slowly sinking” this analyst says

BlackBerry (BlackBerry Stock Quote, Chart, News TSX:BB) may have some folks convinced that the turnaround is complete but the evidence is still missing from the former phone maker’s bottom line, says Ross Healy of capital markets research firm Strategic Analysis.

In fact, Healy thinks that there’s little for the smart investor to pin their hopes on when it comes to BlackBerry.

“It might be a comeback story if I saw the earnings starting to go up but I don’t see that. In the meantime, the stock is slowly sinking,” said Healy, Chairman at Strategic Analysis, to BNN Bloomberg last Thursday.

BlackBerry stock still isn’t cheap, Healy says

“John Chen has not yet produced —of course, everybody bet big time on him, but there has been no follow through on this company in its earnings,” he says. “There’s nothing to say except to cross your fingers. The stock isn’t even cheap on a fair market value basis.”

Don’t look now, but BlackBerry is testing a support level at $9.00, a share price that the stock hit back in 2017 and more recently this past December. The latter was at the start of an upward trend that took BlackBerry from $8.94 per share on December 24 up to $13.74 by late March. Since then it’s been all downhill, however, with the stock touching as low as $8.85 last week.

Impatience could be playing a role here, as investors keep waiting for BlackBerry’s software and security investments to pay off. The company’s latest quarterly report, its first quarter delivered in last June could stand as a prime example, where BB’s share price dropped even as BlackBerry topped analysts’ estimates on revenue with adjusted revenue of US$267 million compared to the expected consensus of US$265 million. EPS came in $0.01 per diluted share, which was in line with the Street.

But BlackBerry’s share price fell by nine per cent after the quarterly report, nonetheless, with speculation that the market was hoping for more production from the company’s cybersecurity acquisition Cylance, purchased last fall and showcased as a harbinger of better things to come for BlackBerry and CEO John Chen, who took the helm in 2013. Cylance’s contribution to BlackBerry’s Q1 revenue was $32 million (GAAP) or $51 million on a non-GAAP basis.

Chen has been alternately praised and bemoaned for his work in attempting to transform BlackBerry from hardware to software, with the optimists seeing growth in the company’s positioning itself within the Internet of Things space. BlackBerry’s software is already finding a place within the connected and autonomous vehicle markets, for example, where Chen sees a bright future for the company.

“When you deem a turnaround successful, that means the business has to be growing. Now, the growing business is usually not the same business that got the company into trouble in the first place,” Chen said to the Financial Post this past March.

“From a company that does US$6 billion in revenue but losing money and it’s burning cash, to a company that is over US$1 billion in software (revenue) making money and generating cash, I’d say those would be on my resume,” he said.