On Friday, RBC (TSX:RY) Capital Markets adjusted their outlook on BlackBerry (TSX:BB) Limited (NYSE:BB) shares, raising the price target to $4.00, up from the previous $3.25, while keeping a Sector Perform rating on the stock. The adjustment follows a meeting with BlackBerry's management during the Consumer Electronics Show (CES). According to InvestingPro data, BlackBerry's stock has shown remarkable momentum, delivering a 67% return over the past six months, with the current price hovering around $4.
The RBC Capital analyst noted that QNX, BlackBerry's automotive software, has traditionally been a significant contributor to the company's valuation. However, the performance of BlackBerry's cybersecurity division, specifically Cylance, had previously dampened investor enthusiasm for the stock.
With the recent sale of Cylance, analysts anticipate an uplift in investor sentiment towards BlackBerry shares. While currently unprofitable with a -$151 million net income in the last twelve months, InvestingPro analysis indicates analysts expect the company to return to profitability this year.
The optimism is attributed to several factors: the improving fundamentals of QNX, increased visibility of QNX to investors, and the potential sale of BlackBerry's Secure Communications unit. These elements are expected to contribute positively to the perception and performance of BlackBerry stock in the market.
The analyst emphasized that the divestiture of the underperforming cybersecurity unit could refocus investor attention on the more successful aspects of BlackBerry's operations. By maintaining the Sector Perform rating, RBC Capital Markets acknowledges the company's stable position while recognizing the potential for growth following the strategic changes.
The revised price target of $4.00 reflects the analyst's confidence in BlackBerry's ability to capitalize on the strengths of its QNX software. This software is increasingly important in the automotive industry, where BlackBerry has established a significant presence. The company's strategic shifts and the shedding of less profitable units appear to be key drivers in the revised valuation of its shares.
Based on InvestingPro's Fair Value analysis, BlackBerry is currently fairly valued. For deeper insights into BlackBerry's valuation and 8 additional ProTips, plus comprehensive analysis of 1,400+ stocks, consider accessing InvestingPro's detailed research reports.
In other recent news, BlackBerry Limited has announced a collaboration with Microsoft (NASDAQ:MSFT) to expedite the development of Software-Defined Vehicles (SDVs). The partnership will integrate the QNX Software (ETR:SOWGn) Development Platform (SDP) 8.0 with Microsoft Azure, aiming to streamline the creation, testing, and integration of automotive software.
The joint effort is expected to speed up development timelines and reduce risks. Future plans include expanding the solution to the QNX Hypervisor and the new QNX Cabin, which will allow automakers to develop digital cockpits using cloud technology.
In addition to the partnership, BlackBerry has made significant strides in its business operations. The company rebranded its IoT division to QNX, aiming to strengthen its position in the automotive and embedded software markets. BlackBerry's Q2 financial results for fiscal year 2025 reported a total revenue of $145 million, despite a non-GAAP operating loss of $4 million.
Financial outlooks for BlackBerry have been adjusted by analysts from Baird, RBC Capital, and Canaccord Genuity (TSX:CF). Baird raised its price target to $3.50, RBC Capital increased the price target to $3.25, and Canaccord Genuity raised the price target to $3.00, all maintaining a neutral outlook on the stock. These revisions reflect BlackBerry's recent sale of its cybersecurity unit, Cylance, to Arctic Wolf, and the dismissal of a lawsuit filed by former executive Neelam Sandhu.
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