BlackBerry’s Q2 Impresses With Auto, Disappoints With Cyber; Maintain $7 FVE

We retain our $7 fair value estimate for no-moat BlackBerry after it reported fiscal second-quarter results that were slightly above FactSet consensus and a tick below our own expectations. The firm’s Internet of Things business continues to grow as QNX earned a design win with Volkswagen during the quarter, and we think it can maintain long-term momentum. On the flip side, we are wary of BlackBerry’s cybersecurity prospects in the near term with another quarter of sequential decline and little to show for its previous headcount and investment increases. We still view management’s fiscal 2027 targets as overly ambitious due to a lack of execution on its go-to-market approach. The market responded negatively to the results, with shares down 2% after hours. Following recent market selloffs, we view shares as slightly undervalued but recommend investors seek a greater margin of safety before entering into this Very High Uncertainty name.