BlackBerry's Path To Profitability In Question, Analyst Cites Cybersecurity Struggles and Sluggish IoT Growth

BlackBerry BB stock is plunging Friday after reporting an upbeat second-quarter print Thursday.

BlackBerry reported revenue of $145.00 million, beating the analyst consensus estimates of $141.42 million. IoT revenue increased by 12% to $55 million, up. Cybersecurity revenue grew by 10% to $87 million. Licensing revenue was $3 million.

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BlackBerry expects third-quarter revenue of $146 million-$154 million and full-year revenue of $591 million-$616 million.

RBC Capital analyst Paul Treiber reiterated BlackBerry with a Sector Perform and a $3 price target.

The re-rating reflects BlackBerry’s sluggish growth in Cybersecurity and IoT and its lack of visibility into growth in emerging segments.

The price target values Cybersecurity at 0.5 times calendar 2025 EV/S and IoT at 6.3 times calendar 2025e EV/S.

Treiber noted his target valuation multiple on IoT is justified below Auto Tech peers given lower forecasted growth, and his target valuation multiple on Cybersecurity is justified below Cybersecurity peers given the segment’s historical struggles and lack of profitability.

Treiber noted that visibility to sustained profitability has improved following the material drop in BlackBerry’s operating expenditures. However, visibility to revenue growth is less clear, given the headwinds of industry and competition.

The analyst noted that the near-term stabilization of BlackBerry’s business and profitability may help lift valuation from trough levels. He said a material re-rating in the stock will likely depend on sustained profitability and growth, along with other potential value-creation strategies like the sale or spin-out of Cybersecurity business.

Treiber projected third-quarter revenue of $150.1 million.

Price Action: BB stock was down 0.98% at $2.52 at the last check on Friday.

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