BlackBerry Earnings: Continued Security Struggles Drive Our Valuation Lower, Despite Cost Savings

We lower our fair value estimate for no-moat BlackBerry to $4.40 per share from $4.90 as we moderate our long-term growth forecast. BlackBerry’s ongoing struggles in its cybersecurity business have weighed on results for the past three years, and we expect underperformance to continue. While we materially lower our security revenue forecast, we also have better confidence in BlackBerry’s execution of its cost savings strategy, which should help profitability. BlackBerry’s fourth-quarter results were positive, but weak security sales guidance for fiscal 2025 aligns with our expectation that this segment will continue to struggle. Shares rose about 6% after-hours, in our view, due to a good quarter and good progress on cost savings. Though shares trade below our fair value estimate, we would point investors to moaty software names under our coverage.