Canaccord Upgrades BlackBerry On 'Increased Conviction In Company's Growth Prospects'

BlackBerry Ltd BB shares traded higher by 3.9% on Wednesday after the stock landed an analyst upgrade.

The Analyst: Canaccord Genuity analyst Michael Walkley upgraded BlackBerry from Sell to Hold and reiterated his $10 price target.

The Thesis: In the upgrade note, Walkley said he is less bearish on BlackBerry’s outlook following a recent meeting with company management.

“We came away with increased conviction in the company’s growth prospects, which looks well-positioned to accelerate given BlackBerry’s differentiated AI-driven data lake approach driving proactive prevention,” Walkley said.

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He said BlackBerry finally seems well-positioned to grow its security business, and its growth could even accelerate if the company successfully sells its licensing business.

BlackBerry’s security business includes Spark, AtHoc and SecuSUITE, and Walkley estimates its target market is worth about $30 billion in 2021. BlackBerry is projecting between 9% and 15% software and services revenue growth in fiscal 2022, and Walkley said Spark is a strong growth contributor.

While he is optimistic BlackBerry’s business is finally turning the corner, Walkley said the company still has a lot to prove to earn another upgrade. He said BlackBerry has an impressive product portfolio and plenty of potential, but its meme stock status creates volatility risk in the near-term.

Canaccord Genuity is projecting $774 million in revenue and an EPS loss of 18 cents in fiscal 2022. However, the firm is projecting $1.02 billion in revenue and 15 cents of EPS for BlackBerry in fiscal 2023.

Benzinga’s Take: The buzz surrounding BlackBerry on social media has died down from peak levels earlier this year, even following news of the Canaccord upgrade. In fact, BlackBerry wasn’t even among the top 20 most mentioned tickers in Reddit’s WallStreetBets community on Wednesday, according to Swaggy Stocks.

Photo: Courtesy BlackBerry