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BlackBerry: Opportunity Beckons in Cybersecurity but Execution is Key
Stock Analysis & Ideas

BlackBerry: Opportunity Beckons in Cybersecurity but Execution is Key

BlackBerry (BB) may be getting a lot of investor attention this year as one of the most popular meme stocks, but getting lost amongst the noise, says Canaccord analyst Michael Walkley, are the company’s improving fundamentals. More specifically, it is the company’s differentiated approach to cybersecurity which should be given more credit.

A recent chat with some of the company’s top brass has brought to the fore the “various levers for future growth within BlackBerry’s cybersecurity business.”

“We came away with increased conviction in the company’s growth prospects, which looks well positioned to accelerate given BlackBerry’s differentiated AI-driven data lake approach driving proactive prevention,” the 5-star analyst said.

It is an aspect of the business which Walkley believes is being overlooked by investors. Recent times have seen the security segment generate around 60% of total revenue, a section which includes Spark (endpoint security + endpoint management), AtHoc (critical event management), and SecuSUITE (secure voice).

These all target a TAM (total addressable market) worth around $30 billion in 2021, and according to management’s forecast, one which should increase to roughly $44 billion by 2025. Of the security offerings, Walkley views endpoint security as the “fastest growing and most competitive.”

Over the past few years, Blackberry has strengthened its endpoint security portfolio with the addition of AI-cybersecurity specialist Cylance. Walkley believes “acquisition distractions” have resulted in Cylance losing market share to competitors such as CrowdStrike and SentinelOne.

But that should all change now, and with the recent introduction of the UEM-agnostic Cyber Suite, Walkley thinks BlackBerry has the “necessary arsenal to stay competitive with the next-gen players while taking share from legacy incumbents Broadcom (Symantec), McAfee, and Trend Micro.”

The pieces are falling into place with BlackBerry finally “turning the corner,” while laying down the “building blocks to reach double-digit longer-term growth within security.” However, there’s still much to be done to confirm the turnaround is complete.

“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 shares,” the analyst summed up.

For now, Walkley upgraded BB’s rating from Sell to Hold, while keeping the $10 price target intact, suggesting shares will remain range-bound for the foreseeable future. (To watch Walkley’s track record, click here)

Walkley, however, has a more optimistic take than that of his colleagues. With 3 additional Sells added to Walkley’s Hold, the analyst consensus rates this stock a Moderate Sell. (See BlackBerry stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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