Earnings

How will Q2 earnings affect Blackberry’s share price?

It’s been a dismal year for BlackBerry’s [BB] share price, which has been trading below its 2020 opening level since January.

Shortly following its January high of $6.89, BlackBerry’s share price gradually fell and closed at $2.90 on 17 March — down 54.83% year-to-date. This marked the stock’s lowest value since 2003, when the stock had only been publicly trading for four years.

Blackberry’s share price went on to recover some of its lost value over the following months, reaching a post-slump peak of $5.79 on 8 June. However, this was still 9.8% lower than its value at the beginning of the year.

Since then Blackberry’s share price has struggled to stay above the $5 mark, closing at $4.76 on 21 September.

Will its second-quarter earnings report, due 24 September, help Blackberry’s share price?

 

 

How has Blackberry been performing?

When Blackberry released its first-quarter earnings for the fiscal year 2021, it reported earnings of $0.02 per share (on a non-GAAP basis) compared to earnings of $0.01 per share for the previous year

This significantly surpassed the Zacks consensus estimate, which projected a loss of $0.02 per share. Blackberry has beaten earnings estimates three times over the last consecutive four quarters.

For the quarter ended May, Blackberry posted non-GAAP revenue of $214m. Although this was a drop of 19.9% from the same period in 2019 when the company posted revenues of $267m, it beat the Zacks consensus estimate of $209m by 2.39%.

Over the past four quarters, however, Blackberry has only managed to top revenue estimates once.

“Blackberry QNX [Blackberry’s operating system for cars and phones] was impacted by macro headwinds in the auto and other embedded sectors, but we are starting to see signs of a recovery,” said John Chen, executive chairman and CEO of Blackberry, in a statement released alongside the earnings report.

“On the enterprise front, we saw good demand from customers who recognised 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,” continued Chen.

“On the enterprise front, we saw good demand from customers who recognised 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” - John Chen, CEO of Blackberry

 

Looking ahead to the next earnings call, analysts are expecting Blackberry to post earnings of $0.01 per share, which would represent a growth of 150% year-over-year (YoY).

As for revenue, analysts expect Blackberry to have made $239m for the quarter, an 8.4% loss from the same time last year. For the full year, Zacks expect earnings of $0.05 per share (down 61.5% YoY) and revenue of $958.5m (up 12.8% YoY).

$239million

Blackberry's expected Q2 revenue

  

Is BlackBerry’s share price a Buy?

Blackberry’s share price has been sluggish for a few years, Aditya Raghunath wrote in The Motley Fool.

“The company exited the smartphone market in late 2016 and pivoted to software and services. While investors believed the company would successfully turn its business around, BlackBerry stock has lost 25% in market value since the start of 2017,” Raghunath stated.

The consensus among 12 analysts polled by CNN Money is to Hold. This rating is held by a majority of nine, with one each giving Blackberry’s share price a Buy, Outperform and a Sell rating.

“While investors believed the company would successfully turn its business around, BlackBerry stock has lost 25% in market value since the start of 2017” - Aditya Raghunath

 

Among the 11 analysts offering 12-month forecasts for Blackberry’s share price, CNN Money reports a median target of $5.50, with a high estimate of $20 and a low of $4.50. The median estimate represents a 15.5% increase on Blackberry’s share price through 21 September’s close.

“There are far too many uncertainties surrounding Blackberry stock currently. While it is trading at a low sales multiple, the tepid performance of [its] Cylance business and uninspiring operating margins makes it a high-risk bet right now,” Raghunath concludes.

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