Is it time to sell BlackBerry?

RBC Dominion Securities analyst Paul Treiber says BlackBerry (BlackBerry Stock Quote, Chart, News, Analysts, Financials NYSE:BB) needs to show accelerating growth and more detail on its General Embedded Market opportunity to sustain its recent valuation re-rating.

As reported by the Globe and Mail, Treiber maintained his “Sector Perform” rating and US$4.50 target on BlackBerry. The average target is US$5.98.

He said the rating “reflects our view that a sustained upward valuation re-rating requires evidence of accelerating top-line growth.”

“With valuation at the high-end of BlackBerry’s 5-year historical range and at a 77% premium to Auto Tech peers, risk-reward on the stock has declined, in our view.” Treiber said.

Treiber said BlackBerry shares have rallied 131% since its fourth-quarter results, with valuation rising to 8.7 times next-12-month EV/sales from 3.5 times.

The analyst said the re-rating reflects enthusiasm for QNX, BlackBerry’s embedded software platform, and its General Embedded Market opportunity, which includes non-auto uses such as industrial robotics and physical AI.

On a sum-of-the-parts basis, Treiber said the implied valuation for QNX has increased to 15 times next-12-month EV/sales from 5.2 times. But he said the $3.1-billion increase in BlackBerry’s market capitalization compares with $60-million of next-12-month GEM revenue and a $2.7-billion industrial robotics total addressable market disclosed by BlackBerry at CES.

For BlackBerry’s first-quarter fiscal 2027 results, due June 25, Treiber expects healthy results toward the high end of guidance and broadly in line with the Street. He forecasts revenue of US$138-million, up 13% year-over-year, and Adjusted EBITDA of US$21-million, up 29%.

“Given likely healthy Q1 results, we believe BlackBerry may increase the low-end of FY27 guidance ranges,” he said.

Treiber said investors need more visibility into GEM revenue, growth, backlog and backlog conversion. BlackBerry has said GEM accounts for 20% of QNX revenue, implying low- to mid-teens revenue growth over the past year. He said GEM is likely growing faster than overall QNX revenue, while GEM-related backlog is likely growing faster than the broader QNX backlog.

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