On Thursday, Canaccord Genuity adjusted its outlook on BlackBerry Limited (NYSE:BB), lowering the price target to $2.70 from the previous $3.25, while continuing to advise investors to hold. The revision follows BlackBerry's first-quarter results for fiscal year 2025, which modestly exceeded the firm's forecasts. This performance was attributed to a strong showing in the Cybersecurity division, bolstered by an improving dollar-based net retention rate (DBNRR).
BlackBerry has been actively pursuing cost reduction initiatives aimed at establishing a more financially stable and profitable enterprise. Under the leadership of CEO John Giamatteo, the company is progressing towards its objective of splitting the IoT and Cybersecurity segments into independent units. The management's ongoing efforts in the first quarter have kept the option of asset divestitures on the table as a means to potentially enhance shareholder value.
The analysis by Canaccord Genuity employed a sum-of-parts valuation approach, which led to the establishment of the new $2.70 price target. The firm acknowledges the management's coherent long-term strategy and recognizes the possibility that the actual value unlocked could surpass their current price target. Moreover, Canaccord Genuity notes BlackBerry's trajectory towards an improved cost framework that supports the profitability and positive free cash flow (FCF) of both business units by the end of fiscal year 2025.
Despite these positive developments, Canaccord Genuity awaits further evidence of effective strategic execution, sustainable growth in profitability within the Cybersecurity business, and the potential for outcomes that exceed their estimates. Until such indicators emerge, the firm maintains its neutral stance on BlackBerry shares.
In other recent news, BlackBerry Limited has been the subject of recent analyst attention, with RBC Capital maintaining its Sector Perform rating and a $3 target, while Baird maintained a neutral rating but reduced the price target to $3 from $3.50. BlackBerry's first-quarter earnings exceeded expectations, with revenue reaching $144 million, primarily due to robust demand for its cybersecurity services. The company also reaffirmed its fiscal year 2025 guidance and announced plans to release segmented financial details in October.
In corporate developments, BlackBerry recently announced the election of seven directors at its annual shareholder meeting. Board member Laurie Smaldone Alsup will not seek re-election, and Lori O’Neill has been nominated as a potential replacement. BlackBerry has also expanded its CylanceMDR service and partnered with ETAS GmbH to market integrated software solutions for software-defined vehicles.
The company's focus on enterprise software and IoT, coupled with its cost-saving efforts and success in securing IoT contracts, underpins its ongoing transition towards profitability.
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