Stock of the Week: BlackBerry

Is it back from the dead?

Andrew Willis 19 October, 2020 | 5:08AM

 

 

Andrew Willis: There might come a day when we’re proudly telling the next generation about how Canada once had its very own cellphone company that turned around its business and experienced its first year of revenue growth in nine years….

BlackBerry (BB)’s 52% year-over-year Q2 increase in its licensing business this year is encouraging, and it’s a reminder of the company’s lasting quality and brand power in the smartphone space – even if the phone isn’t necessarily ‘made’ by BlackBerry.

But before we get too excited, equity analyst Mark Cash reminds us that this part of the business is ‘lumpy’ and is based on when the licensing deals are settled…which isn’t always timely, or relevant.

‘New’ BlackBerry is what has us the most excited. Think autonomous vehicles, artificial intelligence and the ever-growing cloud. There are increasing demands for data security in the future, and that’s where the BlackBerry name is big. We see rising revenue, growing margins - and an undervalued company that won’t stop investing in innovation.

We do, however, understand why it’s undervalued today. There is a lot of uncertainty and it’s been a challenging business environment for clients, which has affected sales. But we see the potential for a bright new chapter in the long term - and this ‘little’ Canadian company has taken on giants before.

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
BlackBerry Ltd6.44 CAD-4.02
TCL Electronics Holdings Ltd0.76 USD3.78

About Author

Andrew Willis

Andrew Willis  is Content Editor for Morningstar.ca

 

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