BlackBerry Stock Price Forecast December 2021 – Time to Buy BB Stock?

BlackBerry stock (NYSE: BB) had soared in the first quarter of 2021 as it joined the ranked of meme stocks which were pumped by Reddit group WallStreetBets. It went on to hit a high of $28.77 but now trades at less than a third of its peaks.

To be sure, BB is not the only meme stock that is trading at a fraction of its 2021 highs. As the meme stock trade fizzled away, stocks like GameStop, AMC Entertainment, Clover Health, and Sundial Growers tumbled. However, despite the crash, BB stock is up around 40% for the year and is outperforming the S&P 500.

Meme stocks

BlackBerry is benefiting from the strong secular headwinds in cybersecurity, IoT, and 5G. BB today is a far different company than it was a decade back. The company has been transforming its business which would add long-term shareholder value.

While some of the meme stocks are trading near their 52-week lows, others like AMC Entertainment and GameStop are still up significantly for the year. Like many meme stocks, BlackBerry is also a turnaround story. What’s the forecast for BB stock and is the massive crash a good buying opportunity?

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BlackBerry released its quarterly earnings

BlackBerry reported its fiscal third-quarter 2022 earnings yesterday after the markets closed. It generated revenues of $184 million in the quarter which was below the $218 million that it had generated in the corresponding quarter last year. Looking at the segment-wise performance, it reported cybersecurity revenues of $128 million while its IoT revenues were $43 million. The company generated revenues of $13 million from licensing and other services.

The company’s cybersecurity revenues were similar to the corresponding quarter last year while the IoT revenues increased from $32 million to $43 million. Meanwhile, its licensing revenues tumbled from $56 million to $13 million.

BB is impacted by the chip shortage situation

Notably, in its previous earnings call, BB had warned of the impact of the fall in automotive production. Global automotive production has taken a hit amid the global chip shortage. The global automotive industry is expected to lose billions of dollars in production this year due to the chip shortage. Ancillary companies like BB are also affected by the slowdown in automotive production.

BlackBerry managed to reach a breakeven level on the adjusted EPS in the quarter after the last few quarters of losses. Commenting on the earnings, John Chen, Blackberry’s CEO said, “This quarter BlackBerry delivered solid sequential billings and revenue growth for both the IoT and Cybersecurity businesses, beating expectations for the second consecutive quarter.  We also beat expectations on earnings, despite the ongoing investment to drive future top line growth.”

BlackBerry gave soft guidance

BlackBerry said that it expects to post cybersecurity revenues between $125-$135 million in the fourth quarter which was below the $143 million that an analyst polled by Refinitiv was expecting. It expects the IoT revenues to be between $50-$55 million which would be near the pre-pandemic levels. While the company’s third-quarter earnings were ahead of the estimates, the soft guidance took a toll on market sentiments and the stock was trading lower in US post-market price action.

BB expects the automotive supply chain to get better

BlackBerry expects the automotive supply chain to get better in the fourth quarter which would boost revenues for its QNX car software. During the quarter, BB entered into several strategic partnerships for the software. Among these was the multi-year deal with BMW Group to use the software for SAE Level 2/2+ driving automation functions in several BMW models. Also, Indian automaker Mahindra & Mahindra selected the QNX Real-Time Operating System (RTOS) and Hypervisor controller for their next-generation SUV.

In its cybersecurity business also, the company announced several deals. Among these was a comprehensive deal with Okta.

BlackBerry stock forecast

Wall Street analysts are quite bearish on BB stock, just like they are on fellow meme stocks. Of the 11 analysts covering the stock, only one has a buy rating while three have a hold rating. The remaining seven analysts have a sell rating on BB stock. It has a median target price of $9 which is similar to current prices.

BB stock long term forecast

BB stock might continue to remain volatile in the short term especially as the meme trade unwinds. However, it is a turnaround candidate. While its sales are expected to fall 18.7% in the current fiscal year, analysts polled by Koyfin expect the sales to rise 21.4% and 22.8% in the next two fiscal years respectively. The deals that the company has been signing would help it improve its earnings in the long term.

Should you buy BlackBerry stock?

BlackBerry stock is looking bearish on the charts and is trading below the 50-day, 100-day, and 200-day SMA (simple moving average). The stock has been in a downtrend and has hit lower lows. It was approaching a key resistance level but looks unlikely to cross over looking at the premarket price action. The stock has a 14-day RSI of 46.5 which is a neutral indicator while the 12,26 MACD (moving average convergence divergence) gives a buy signal.

BlackBerry stock trades at an NTM (next-12 months) EV-to-revenue multiple of 6.4x. The valuations multiples don’t look cheap considering the company’s poor record on profitability. However, BB is turning around the business which would take time. That said, if you are looking to buy BB stock, it might be prudent to wait on the sidelines for some time as it should give good buying opportunities.

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