What’s with all the doubt when it comes to BlackBerry (NYSE:BB) stock? Once best known for its state-of-the-art phones, BlackBerry is enjoying a second act in Internet of Things (IoT) and cybersecurity. And BB stock got plenty of attention over the last year from meme traders on Reddit’s r/WallStreetBets forum.
The company is making some interesting moves as it adjusts to the new reality of remote workforces. It enjoyed an earnings beat this fall, and the stock is up more than 50% on the year.
But then, look at the recent commentary from analysts and some of my InvestorPlace colleagues. Despite having a strong year so far, many are feeling less than positive about BlackBerry and its shares.
What Writers and Analysts Say About BB Stock
My colleague Muslim Farooque suggests that BB stock has a grim future with minimal growth drivers. He says that the company’s “lackluster operating performance indicates that it is unlikely to create long-term value.”
Meanwhile, Will Ashworth summarily dismisses suggestions that BlackBerry could be a lucrative takeover target by either Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) or Qualcomm (NASDAQ:QCOM).
“From my vantage point, BlackBerry is in no position to reel in such a significant buyer. Maybe I’m wrong, but I don’t think so,” Ashworth concludes. “BB stock isn’t worth more than single digits.”
Then there’s TD Securities analyst Daniel Chan, who tosses some cold water on BlackBerry’s recent earnings beat. Chan says the quarter was a “low-quality beat,” reasoning that the company’s efforts to sell a portion of its patent portfolio has already been priced in.
On TipRanks, one analyst advises holding BB stock and three others are pushing the “sell” button. BlackBerry has a price target of only $9.01, which is about a 14% downside from today’s stock price.
Are the bears being too rough on BB stock? Probably.
BlackBerry Stock at a Glance
First, let’s take a look at the stock performance and those so-called “low-quality” earnings results.
The company reported second-quarter revenue of $175 million and a loss of 6 cents per share. Both of those beat analysts’ expectations of $161.9 million and a loss of 8 cents per share.
CEO John Chen said that cybersecurity revenue showed “robust sequential billings” and growth. Sales for the company’s IoT products came in at $40 million.
The company also announced that it agreed upon a sale price for a portion of its patent portfolio with an undisclosed buyer. The patents, including mobile devices, messaging and wireless networking, are parts of the company that BlackBerry doesn’t deal with any longer.
Looking forward, Chen said he expected the quarter to be a low-water mark for BlackBerry. But he said there are “significant headwinds” for the rest of the year. Those include supply chain issues as well as Covid-19 cases in Asia that are hindering production.
Wall Street took the report in stride, and its stock rose 10% after the announcement. We can attribute gains primarily to news of the patent sale. For the year, BB stock is up almost 56%.
The Bullish Argument
It seems like a lifetime ago that BlackBerry was making waves for its mobile phones. BlackBerry launched its first line of mobile phones in 1999. Its devices were snapped up by a lot of people in the business community as status symbols, even more so than Apple (NASDAQ:AAPL) devotees grab the latest iPhone.
BlackBerry was the first company to make email available on mobile phones. It was also the first to introduce a QWERTY keypad on a cellular device.
But all that’s in the past. Nearly a year ago, BlackBerry signed a deal with Amazon (NASDAQ:AMZN) Web Services to develop and market Ivy, which is BlackBerry’s intelligent vehicle data.
Ivy’s software improves operations of cloud-connected vehicles by giving gives automakers a secure way to read vehicle sensor data, normalize it “and create actionable insights from that data.” Developers can use Ivy to build machine learning-powered capabilities.
BlackBerry also offers products like Spark Suites, a cybersecurity product for companies and governments. As Covid-19 made more workers remote, BlackBerry expanded its offerings to include programs like BlackBerry Gateway, which is a secure, cloud-based product for remote workers.
Most recently, BlackBerry announced a partnership with Okta (NASDAQ:OKTA) and its BlackBerry Spark unified endpoint management system (UEM) that will help businesses improve the security of their networks with a remote workforce.
“We are delighted to partner with Okta, a leading provider of identity management, to deliver advanced security and a superior employee experience to our customers around the world,” said Alex Willis, BlackBerry’s vice president of technical solutions.
The Bottom Line on BB Stock
Fortunately for BlackBerry, this isn’t 1999 any longer. Plenty of mobile phone companies fell by the wayside, but BlackBerry managed to evolve to meet the needs of today’s workforce.
BlackBerry must continue making the right moves to get past what is expected to be a soft Q3 and Q4 earnings report. But for a long-term investor, BB stock may very well be a solid investment in cybersecurity and machine learning. And those are two fields that will be growing in importance in the next few years.
On the date of publication, Patrick Sanders did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 was head of the investment advice section at U.S. News & World Report. Follow him on Twitter at @1patricksanders. As of this writing, he did not hold a position in any of the aforementioned securities.