BlackBerry is a pass, says RBC

Investors should still be in a wait-and-see mode when it comes to Canadian tech company BlackBerry (TSX:BB). That’s according to RBC Capital analyst Paul Treiber who on June 25 delivered an update to clients on BlackBerry after the company’s fiscal first quarter earnings.

Software and security business BlackBerry reported its Q1 fiscal 2021 financials on June 24, posting a net loss of $636 million or $1.14 per share for the three-month period ended May 31, 2020. That compared to a loss of $35 million or $0.06 per share a year earlier. Revenue for the quarter was $206 million, down from $247 million a year ago and down from $282 million for the previous quarter. (All figures in US dollars except where noted otherwise.)

The quarter also saw BlackBerry get hit by a $594-million goodwill impairment charge in connection with its enterprise cybersecurity wing Spark, while management said it would not be providing guidance for its fiscal 2021, appealing to uncertainty in the global economy due to the COVID-19 pandemic.

CEO John Chen said BlackBerry’s QNX business was affected by macro headwinds in the auto sector as well as the embedded tech space, although Chen added that he’s starting to see signs of a recovery.

“On the enterprise front, we saw good demand from customers who recognized the necessity for BlackBerry’s security, business continuity, and productivity solutions in an
increasingly remote working environment. BlackBerry is capitalizing on the secular
trends of securing and connecting endpoints,” said Chen in a press release.

In his report, Treiber maintained his “Hold” rating and $5.00 target price for BlackBerry, which at the time of publication represented a projected 12-month return of 1.6 per cent.

Year-to-date, BlackBerry is down 24 per cent.