Earnings Preview: BlackBerry

U.S. markets got off to a slow start Wednesday morning and did not seen much improvement afterward. COVID-19 vaccine maker BioNTech traded up more than 5% after beating top-line and bottom-line estimates late Tuesday. Pet care provider Chewy traded down more than 13% after missing estimates for both losses and revenue.

Memory chip maker Micron reported solid results late Tuesday, and shares traded up less than 1% Wednesday morning. Athletic apparel maker Lululemon missed on revenue but beat on earnings and traded up more than 8% in the morning.

There are few earnings reports of interest for the rest of this week. In fact, we think there is just one, BlackBerry Ltd. (NYSE: BB), and it is due out after markets close Thursday.

After touching a high of around $20.00 in early June, the shares have dropped about 62% of their value. Once a giant among cell phone makers, the company’s transition to a security software provider and supplier of an automobile software platform (QNX) has been, to be kind, rocky. Cybersecurity generates about two-thirds of the company’s revenue, and  QNX is the most widely used embedded operating software in the auto industry. BlackBerry recently sold the majority of its mobile and wireless patent portfolio for around $600 million, giving it a war chest to invest in its current pursuits.

The company gets little attention from analysts, and most of that is negative. Of nine brokerages covering the stock, five have Sell or Strong Sell ratings, and none has rated the shares at Buy or Strong Buy. At a recent price of around $7.70 a share, the stock trades above the median price target of $7.00, and it offers an upside potential of almost 36% based on the high price target of $9.50.

Fiscal fourth-quarter revenue is forecast at $186.04 million, which would be up 1.1% sequentially but down nearly 13% year over year. BlackBerry is expected to post an adjusted loss per share of $0.03, compared to the prior quarter’s breakeven finish, and down from earnings per share (EPS) of $0.03 in the year-ago quarter. For the 2022 fiscal year that ended in February, the company is currently forecast to post a loss per share of $0.14, compared with EPS of $0.18 a year ago. Revenue is forecast to drop by 19.6% to $748.38 million.

BlackBerry is expected to post EPS of $0.26 in its 2023 fiscal year and $0.10 in fiscal 2024. The stock’s 52-week range is $5.80 to $20.17. BlackBerry does not pay a dividend. Total shareholder return for the past year is negative 17.5%.

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