Should you buy BlackBerry shares? The stock price spiked on solid FQ2 Results

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Sep 23, 2021
  • BlackBerry shares on Thursday spiked more than 12% after solid Q2 results.
  • The company announced its most recent quarterly results Wednesday after the market closed.
  • The cybersecurity company posted better-than-expected Q2 revenue and non-GAAP EPS.

On Thursday, BlackBerry Ltd (NYSE:BB) shares surged more than 12% after announcing its most recent quarterly results. The company reported solid FQ2 revenue and earnings Wednesday after markets closed, beating analyst expectations.

BlackBerry posted Q2 non-GAAP earnings per share of -$0.06, beating the consensus Street estimate of -$0.07. In addition, although revenue for the quarter declined by more than 32% to $175 million, it still outperformed the average analyst estimate by $10.72 million.

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However, its GAAP EPS of -$0.25 came short of expectations by $0.12.

BlackBerry reported a significant sequential growth in revenue from its cybersecurity business, while the Internet of Things (IoT) unit also impressed despite the chip shortage triggered by the pandemic.

Should you bet on BlackBerry’s exciting growth prospects?

From a valuation perspective, BlackBerry shares trade at a steep forward P/E ratio of about 95.60, making the stock less compelling to value investors. 

However, given the exciting growth prospects of the cybersecurity business and an inevitable recovery of the IoT segment, the future looks bright. Moreover, analysts expect BlackBerry’s earnings per share to grow by 171% next year, thereby trimming the impact of this year’s forecast EPS decline of 616%.

Therefore, with this year’s earnings woes already priced in, BlackBerry could be an exciting growth stock ahead of next year’s rebound.

Source – TradingView

Can BlackBerry stock price break above the 100-day MA?

Technically, BlackBerry shares seem to be trading within a sideways channel formation in the intraday chart. However, the stock price recently bounced off the critical support level to surge towards the 100-day moving average, finding a resistance.

Therefore, with the stock yet to reach the overbought conditions of the 14-day RSI, investors could target extended rebound profits at $11.83 or higher at $13.32. 

On the other hand, if the 100-day MA triggers a pullback, BalckBerry shares could find support at $9.38 or lower at $7.94.

Bottom line: is there time left to buy the BlackBerry rebound?

In summary, although BlackBerry shares soared more than 12% on Thursday, the stock is yet to reach overbought conditions. 

Moreover, with the company registering strong growth in the cybersecurity business, the current rally seems to continue for the foreseeable future.

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