Stock of the day 23/09/2015 – Blackberry Ltd

It’s been a tough 2015 for Blackberry, as the company continues to struggle to keep up with the competition; can that be changed with its Q2 2016 earnings release on Friday?

After opening the year at $11.02, the stock quickly fell to $9.70 by the middle of January, only for a 30% surge to lift it to what has so far proved to be a 2015 high of $12.60. The reason? Reports that Samsung had submitted a $7.5 billion bid for the company was seen by investors as the rescue Blackberry needed. However, with Blackberry refuting the claims, and Samsung declining to comment, the stock soon fell back to $10.11, the bid become a distant dream.

The release of Blackberry’s Passport and Classic smartphones briefly restored some investor-faith in the stock, and by the start of March it had climbed back to $11.43. Yet, as said, this growth didn’t last long, with the stock taking a sharp, 7.5%, downturn on March 9th after Goldman Sachs downgraded the company to a ‘Sell’ rating and threw doubt on its ability to turnaround. This slide didn’t stop for most of the month, and on the eve of its Q4 2015 earnings release on March 27th Blackberry was trading at $9.61.


(Source: IT-Finance.com 23/09/2015)

Things went from bad to worse with those actual results; whilst a $28 million profit was a nice surprise considering most analysts were expecting a loss, a 32% decline in sales to $660 million (a 9 year low) was around $120 million worse than what had been forecast, and caused the stock to plunge a further 7% to $8.77.

Blackberry managed to pick itself up from that low across April and May, settling into a $10 to $10.50 trading bracket for the majority of the latter month. However, news of a series of job cuts at the end of May did nothing to reassure investors of the health of the company, setting off a chain of losses that hasn’t really shown any signs of slowing down.

By its Q1 2016 report on June 23rd the stock had fallen back to $8.90; a $28 million loss was an improvement on the $60 million loss the year before, but revenue fell by around a third to $658 million from $966 million. Understandably these figures caused the sell-off to intensify, culminating in a 2015 (and 20 month) low of $6.80 by the end of August. Blackberry is a current trading price of $7.26 (IT-Finance.com, 23/09/2015).

Investors will be awaiting news of the Blackberry Venice, the company’s first Android smartphone (and latest attempt to revitalise its brand), on Friday, including details on its price and release date. They will also be interested in Blackberry’s $425 million start-of-September acquisition of mobile security provider Good Technology. Figures wise, the company is expected to post a 33.3% fall in revenue to $611 million alongside a $0.05 net loss per share.

Blackberry has a consensus rating of ‘Hold’ with an average target price of $9.69.