Is BlackBerry an overvalued stock?

RBC Dominion Securities analyst Paul Treiber expects BlackBerry (BlackBerry Stock Quote, Chart, News, Analysts, Financials NYSE:BB) to report “healthy” fiscal Q2 results, with revenue and earnings potentially ahead of Street expectations.

As reported by the Globe and Mail, in a Sept. 21 preview, Treiber maintained his “Sector Perform” rating and US$9.00 target on BlackBerry. The average target is US$10.03.

“Our Sector Perform rating reflects our view that risk-reward on the stock is balanced, given the stock’s significant upward valuation rerating,” Treiber said.

BlackBerry is scheduled to report fiscal Q2 2027 results Thursday.

Treiber expects revenue of US$148-million, up 14% year-over-year and above consensus at US$146-million. His forecast is at the high end of BlackBerry’s guidance range of US$137-million to US$148-million.

The analyst noted BlackBerry has exceeded consensus revenue by 7% on average over the past four quarters, while adjusted EPS has beaten consensus by two cents on average.

Treiber expects Adjusted EBITDA of US$28-million and adjusted EPS of four cents, both slightly above RBC and consensus estimates.

He said the automotive backdrop remains mixed, with production headwinds in some regions, including China. Still, rising software content per vehicle should support QNX growth.

Treiber expects QNX revenue of US$75-million, slightly above consensus at US$74-million and at the high end of guidance.

For Secure Communications, he expects revenue to normalize to US$63.0-million, also at the high end of guidance, following an outsized fiscal Q1.

Treiber said BlackBerry is likely to reiterate its fiscal 2027 guidance after raising it last quarter.

The analyst is also watching for contract wins for Alloy Kore, the vehicle software platform launched by BlackBerry’s QNX and Vector.

Management has said it expects QNX to secure Alloy Kore design wins this year. Treiber said any signed wins would likely be announced, given the potential materiality, with average revenue per vehicle up to three times higher and total contract value potentially reaching US$100-million.

While Alloy Kore is not expected to affect revenue until 2029 or 2030, Treiber said one or more wins above US$100-million would materially increase QNX’s backlog, which stood at US$950-million as of fiscal Q4 2026.

Treiber also said QNX’s general embedded market business is building physical AI momentum. The segment accounts for about 20% of QNX revenue and is growing faster than automotive, according to management.

During the quarter, BlackBerry announced a partnership with Hailo and design wins with Momenta and XHEART. Treiber said higher-profile partnerships and wins could improve investor sentiment around QNX’s physical AI opportunity.

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