Sell your BlackBerry stock, this fund manager says

BlackBerry’s (BlackBerry Stock Quote, Chart, News TSX:BB) share price has had a nice rally over the past couple of months — is this a sign of things to come in 2020?

The jury is still out, says Rick Stuchberry of Wellington-Altus Private Wealth, who thinks that BB is still a big question mark until the company completes its multi-year turnaround.

The past two years have been disappointments for BlackBerry, whose share price went from $17.00 at the start of 2018 to as low as $6.48 by the fall of last year. Much of the damage has been linked to uncertainty over the company’s remodelling as a software company after making a name for itself in the mobile handset business.

And while the company looks to be well-positioned in the connected tech and cybersecurity fields, the results have yet to show up strongly on the company’s quarterly financials, which have consistently underwhelmed on revenue growth.

Stuchberry says investors should be waiting for clearer signs of renewed success from the company before buying the name.

“We’re still in this turnaround situation, and we don’t own any BlackBerry in our portfolios. We’ve taken our technology and moved it to the United States or offshore as we think that there are better opportunities there,” said Stuchberry, portfolio manager at Wellington-Altus, in conversation with BNN Bloomberg on Wednesday.

“Strategically, trimming down your [BlackBerry] is a really smart move. It doesn’t owe you anything now and if it stumbles a little bit, that’s fine. There’s been a great turnaround going on for a number of years and it looks like it’s still not quite finished yet,” says Stuchberry.

But BlackBerry has been doing well since hitting bottom last October, climbing a full 37 per cent over that span and buoyed by a positive earnings report in mid-December. There, BlackBerry posted revenue growth of 21 per cent to $267 million and adjusted revenue of $280 million.

BB’s earnings were $17 million or $0.03 per share, whereas analysts had been expecting an adjusted profit of $0.02 on an adjusted top line of $276 million.

CEO John Chen noted on the quarter that BlackBerry saw sequential growth in revenue across all of its software business while generating non-GAAP profitability and free cash flow.

“I am pleased with our progress,” Chen wrote in a press release on December 20. “Our pipeline is growing as we deliver against our product roadmap and execute on our go-to-market expansion.”

BlackBerry recently made news through a partnership with Amazon, one which will see BlackBerry’s QNX platform and Amazon Web Services IoT services. BlackBerry has so far been able to garner wins with automakers who are using QNX as the operating systems for their connected vehicles, with AWS now adding cloud capabilities to BlackBerry’s car offerings.

“By working with AWS, we can provide OEMs with a unique foundational software platform that will allow them to build the next generation connected and autonomous cars of the future,” said John Wall, Senior Vice President and Co-Head of BlackBerry Technology Solutions, in a January 6 press release.

“By combining our technologies and strengths into one dedicated cloud-based offering, we can ensure automakers have the tools they need to deliver the driving experience consumers want, without sacrificing on the security and reliability they need,” Wall said.