Skip to Content
Stock Analyst Update

BlackBerry Slightly Overvalued

We're maintaining our fair value estimate after the firm reported in-line results.


 BlackBerry (BB) reported fiscal fourth-quarter revenue and earnings that were in line with consensus but slightly off our internal estimate. While the firm continues to make headway in the enterprise mobility management software market, or EMM, we remain doubtful about BlackBerry’s ability to effectively compete with much larger companies in the space in the long run, though the firm’s recently announced partnership with Microsoft provides its current standing within the EMM space some support. Management guided to double-digit revenue growth in software and services for fiscal 2019 and expects positive non-GAAP EPS and free cash flow. We did not make any significant changes to our projections and maintain our $10 per share fair value estimate for BlackBerry. While the shares are trading flat after the earnings announcement, we remain convinced that they are slightly overvalued. We recommend a wider margin of safety before investing in this no-moat and very high uncertainty name.

Total revenue came in at $233 million, down 19% year over year. With revenue from handheld devices and service access fees continuing to dwindle away, as expected, the 16% year-over-year growth in software and services revenue, which accounted for 91% of the company’s total revenue, was encouraging. According to management, BlackBerry enterprise software is gaining further traction in the government vertical, which brought in 40% of total enterprise software revenue. Plus, the firm recently announced a partnership with Microsoft providing additional security and a more consistent user interface and experience for Microsoft apps on Android and iOS mobile devices, which we think could help BlackBerry sign additional enterprise clients.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Ali Mogharabi does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.