BlackBerry Ltd was not very impressive at the Mobile World Congress (MWC) in Barcelona, believes Cormark analyst Richard Tse. Though the analyst noted that his investment thesis is partly based on a rollup strategy, he noticed that some rivals showcased much better solutions at the MWC – the biggest mobile industry exhibition. Tse maintains his “Buy (Speculative)” rating on BlackBerry with a price-target of $11.00.
Rising risk from market perspective
In the past, Tse stated that solutions like Mobile Device Management and Enterprise Mobility Management (MDM/EMM) would play a key role in the Canadian firms product offering, but now he sees increased risk in them.
“In particular, while incumbents like AirWatch continued to maintain a big presence, we noticed an equally well-rounded portfolio of EMM solutions from Samsung KNOX and IBM’s MaaS360 which were arguably further along when it comes to an integrated platform than BlackBerry,” Tse noted. “All that is to say that even with a pivot, growing competition heightens the level of risk to owning this name.”
Tse notes that the market is moving at a brisk pace, and with what has been showcased at the MWC, it can be said that risk is “considerably higher than we thought going into this year’s trade show.”
Bright spots for BlackBerry
At the MWC, BlackBerry Ltd made several announcements including the acquisition of a UK-based cybersecurity consultancy – Encription Limited, and availability of its Enterprise Solutions and Services to Microsoft users via the Azure cloud platform. These two areas – security and Enterprise services are quite lucrative, and the Canadian firm holds a decent position in these areas.
Another segment, where BlackBerry could get success is the Internet of Things (IoT), believes Tse. In asset tracking (under IoT), the firm is expected to launch a product soon, but Tse says he has seen advanced solutions being already used by large logistics firms. Tse talked of an “impressive” AT&T offering that offers similar functionality to BlackBerry’s proposed offering.
Another area that could do well for the Canadian firm is its QNX OS. Though the firms OS may not be popular among smartphones, its OS is being used in the traffic lights to make it smarter. Also, its OS is powering the infotainment systems in majority of the automobile, and is also being used to drive manufacturing and medical equipment. So, QNX may not be the leader among the smartphone, it has certainly helped BlackBerry to carve out their own niche.
On Monday, BlackBerry Ltd shares closed up 4.69% at $7.81. Year to date, the stock is down almost 16% while in the last one-year, it is down almost 28%.