BlackBerry is still a stock to avoid, RBC says

Canadian tech company BlackBerry (BlackBerry Stock Quote, Chart, News TSX:BB) received a “Hold” rating from RBC Capital analyst Paul Treiber, who on Tuesday reasserted his rating and set a price target of $5.00 per share.

BlackBerry delivered its fiscal second quarter 2021 results on Thursday, posting a loss of $23 million on revenue of $259 million. Those numbers compared to a loss of $44 million a year ago on revenue of $244 million. (All figures in US dollars.)

Non-GAAP earnings for the Q2 were $0.11 per share, which beat the consensus forecast of $0.02 per share, while non-GAAP revenue of $266 million was also better than the consensus $238 million.

“The company continues to be financially healthy and in a strong position to focus on our long-term strategy,” said BlackBerry CEO John Chen in the earnings call on Thursday.

Chen said while the company’s Internet-of-Things secure platform Spark continues to perform well during the COVID-19 pandemic, along with a strong quarterly showing from BB’s licensing division, the company’s QNX operating system “continued to be a negative,” affected in large part by the slowdown in auto sales.

Chen highlighted BlackBerry’s contract wins, saying, “BlackBerry continues to have the trust of government around the world. During the quarter, our UEM suite was added to the Department of Defense Information network approved product list quoted as APL. BlackBerry is the only UEM vendor that has achieved this level of approval today. This achievement is based on the completion of cybersecurity and interoperability certifications.”

BlackBerry ended the quarter with cash and equivalents of $977 million, while subsequent to the quarter’s end it redeemed $605 million in existing convertible debentures and issued $365 million of new convertible debentures, altogether reducing the company’s debt by $240 million.

BlackBerry’s share price has mostly stayed within the $4.50 – $5.50 since May of this year, while its year-to-date return is currently a negative 24 per cent. At press time, Treiber’s $5.00 target represented a projected 12-month return of five per cent.