BlackBerry Shares Gain On Outlook for Security Software

BlackBerry Key2 Dual Sim Smartphone, Berlin, Germany, September 10, 2019.

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shares are getting a boost from upbeat comments on the company’s security software business from Canaccord Genuity analyst T. Michael Walkley.

Walkley lifted his rating on the stock to Hold from Sell, while keeping his $10 target price on the stock, just slightly above Tuesday’s closing price at $9.67. On Wednesday,


(ticker: BB) shares rallied 4%, to $10.06.

Walkley had cut his rating to Sell in June, mostly on a valuation basis. The stock price has since dropped about 20%.

BlackBerry, once a dominant player in smartphones, has morphed into a software business. The company has been seeking a buyer for its phone-related patent portfolio.

For its fiscal first quarter ended May 31, BlackBerry posted revenue of $174 million, down 15.5% from a year ago, and off 17.1% sequentially, but above the Wall Street consensus forecast for $171 million. 

In a research note, Walkley said he came away from an interview with two of the company’s executives feeling more bullish on the company’s security software business. “We believe management finally has a cogent plan in place to grow its security practice, which should only accelerate through additional capital if a deal is reached to sell its licensing business,” he writes. 

While Walkley adds that BlackBerry appears to be “turning the corner,” he adds that he’s not quite ready to recommend the stock.

“We await more proof in execution on the new product roadmap, evidence of cross-selling opportunities emerging, growing overall software and services revenue, and the potential for upside to our estimates before becoming more constructive on the share,” he writes.

Write to Eric J. Savitz at