BlackBerry Analyst Cites Concerns On Visibility, Financing Despite Q3 Earnings Beat: Here Are The Details

RBC Capital Markets analyst Paul Treiber maintained the Sector Perform rating on BlackBerry Ltd BB and cut the price target to $4 from $4.50 despite the third-quarter earnings beat reported yesterday. 

BlackBerry reported quarterly earnings of one cent per share which exceeded the Street's estimate of losses of three cents per share. Revenue clocked in at $175.00 million, beating the analyst consensus estimate of $173.53 million, a 3.55% increase over sales of $169.00 million in the same period last year.

BlackBerry said it expected fourth-quarter revenue to be between $150 million and $159 million versus estimates of $200.37 million.

The analyst said investor visibility declined for the company's near-term momentum, and as cash continues to decline, it may require the company to seek additional financing that may be expensive or dilutive.

Although the third-quarter Cybersecurity revenue remained healthy (up 8% Y/Y to $114MM, matching consensus), it reflected the contribution from a large license contract, the analyst wrote. 

The analyst said corporate actions such as the separation of IoT and Cybersecurity might be value accretive, but it raised uncertainty regarding BlackBerry's future growth.

Consequently, Treiber lowered estimates for revenue to $834.0 million (from $890.0 million) and EPS to $(0.01) from $(0.00) for FY24.

The analyst also revised estimates for FY25 revenue and EPS to $638.1 million (from $724.9 million) and $(0.03) from $(0.07).

BB Price Action: BlackBerry shares are down 14.02% at $3.53 on the last check Thursday.

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Photo: Courtesy BlackBerry