BlackBerry Up On Multiple Partnership Agreements

BlackBerry Up On Multiple Partnership Agreements

 
The stock of Blackberry Ltd (NYSE: BB) has gained about 30%n the past two weeks to trade at about $14. The rally began after the company reported third-quarter results that beat analysts’ estimates. The uptrend was also fuelled by the announcement of a partnership with the Chinese internet giant Baidu on a self-driving car project. We expect the stock to remain bullish in the near-term future due to reasons given below.

Aided by an increase in business software sales and licensing revenue, the company reported a third-quarter revenue of $226 million, beating analysts’ estimates of $215.4 million. However, the revenues were 25% down on a y-o-y basis.

Segment wise, enterprise software and services revenue increased 11.5% y-o-y to $97 million. The company received 3,000 orders in the recent quarter from customers, including NATO, Deutsche Bank, and the US government. Intellectual property and licensing revenue grew 67% to $50 million. BlackBerry Technology Solution’s group recorded revenues of $43 million, almost unchanged from the similar period last year.

For the third-quarter ended November 30, BlackBerry posted adjusted earnings of $0.03 per share, beating analysts expectation of a break even.

The enterprise software and Internet of Things company has recently formed a joint venture, named PT BB Merah Putih, to license its software and services for the manufacture of mobile devices for the Indonesian market. Other deals worth mentioning are cyber threat combat deal with Giuliani partners, an agreement with Indian telecom company Optiemus Infracom, and a business cooperation deal with Ford.

The analysts at Zacks investment research expect the company to perform well in 2018. The long-term debt-to-equity ratio of BlackBerry is only 32.7. The industry’s leverage ratio is 47.9 and that of the S&P 500 index is 82.9%.

Last Wednesday, the company announced that it will join hands with Baidu on a self-driving car project. BlackBerry’s management detailed that Baidu will use its QNX Hypervisor 2.0 software, designed for complex in-vehicle computer systems, in Apollo, the open-source self-driving platform of the Chinese firm.

Additionally, BlackBerry has signed deals with chipmaker Qualcomm, and auto tech companies Aptiv and Denso. Based on the above facts, Zacks Investment Research has upgraded the stock from a “hold” rating to a “buy” rating. Thus, fundamentally, the stock is expected to remain bullish for the short-term.

Technically, the positive reading of the Chaikin money flow indicator is indicating bullishness in the stock. The rising MACD histogram also signals that the uptrend is still intact. Thus, we can expect the stock to rise further in the days ahead.

Blackberry - Technical Analysis - 9th January 2018

A call option may be best suited to gain from the current rally. We may trade the uptrend only if one of our trusted binary brokers (listed here) offer an option contract that remains valid for a period of one week. Another condition to satisfy for purchasing the call option is the stock of BlackBerry should be trading at around $14.

Disclaimer: The trading analysis offered here is our opinion. It is not provided as trading advice, merely an indication of our trading plan. We cannot guarantee success and we encourage traders to incorporate a strong money management strategy to limit losses. Please use this article as part of your own research before formulating strategies prior to trading.


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