When BlackBerry reported fourth-quarter 2021 and full fiscal year results Tuesday, the company missed quarterly and full-year revenue estimates. According to Canaccord Genuity analyst T. Michael Walkley, the miss was “primarily driven by licensing headwinds due to ongoing negotiations for the sale of part of its mobile device patent portfolio.”
Due to the fact that BlackBerry was negotiating the sale of these patents, it couldn’t license them to other parties. If and when the company reaches an agreement for the sale of its patent portfolio, Walkley believes “this could help unlock value and provide a capital infusion to drive accelerated software and services growth.”
On that basis, Canaccord lifted its rating on the shares from Sell to Hold and lowered its price target from $10 to $9, some 3.6% below Tuesday’s closing price.
Now, Walkley is upbeat on the potential for BlackBerry’s QNX software platform. As automobile computing architectures become more rational, dropping from some 60 to 100 control units to around 10 or 12 domain control units, Walkley sees a ” revenue opportunity for QNX per auto to potentially increase ~2-3x or more.”
That said, Canaccord still expects new vehicle sales to decline for the next several quarters and “continue[s] to model QNX with a slow and gradual recovery.”
BlackBerry also struck a deal in December with Amazon to use the e-commerce giant’s AWS cloud service to access and analyse vehicle sensor data for third-party use. Canaccord sees this “as a longer-term positive for the company barring any operational setbacks and believe[s] it can meaningfully increase software revenue per vehicle opportunities as this new opportunity scales.” The platform is expected to be ready in time for model year 2023 vehicles.
On Wednesday, however, BlackBerry stock traded down about 10% to around $8.40, in a 52-week range of $3.18 to $28.77. The consensus price target on the stock is $7.69.
