Stock Up Sale
After losing nearly 42% of its value in the previous couple of quarters, BlackBerry (TSX:BB) stock seems to be regaining strength in the ongoing quarter. The Waterloo-headquartered enterprise company’s stock currently trades at $3.94 per share with a market cap of $2.3 billion after surging by over 9% over the last 30 seasons. By comparison, the TSX Composite benchmark has seen around a 1.6% increase during this period.
Before I try to answer the question of where BlackBerry stock will be in a year, let us first understand the key factors that are driving its performance in 2024.
What’s driving BlackBerry stock in 2024?
If you don’t know it already, in the last more than a decade, BlackBerry has evolved from its original focus on smartphones to become an enterprise software firm. It now primarily focuses on cybersecurity, endpoint management, and Internet of Things (IoT) solutions. Although its cybersecurity segment continues to be its largest source of revenue, the company has been investing heavily in its IoT segment, which includes its highly popular QNX operating system for embedded systems, such as cars, medical devices, and industrial equipment.
A gradual recovery in BlackBerry stock started in April after the company announced its significantly better-than-expected fiscal year 2024 (ended in February) financial results. During the fiscal year, the software firm’s total revenue rose around 30% YoY (year over year) to US$853 million. This strong sales growth helped the company post an adjusted annual net profit of US$31 million compared to an adjusted net loss of US$103 million In the previous fiscal year. The company’s latest yearly profit figure was also significantly better than Street analysts’ expectations of a US$1.5 million loss.
In the final quarter of the fiscal year 2024, BlackBerry’s IoT division not only achieved a record revenue quarter but also marked a significant milestone with a QNX royalty backlog that surged to $815 million, a 27% YoY jump. This substantial backlog underscored the strong market demand and the IoT segment’s robust pipeline with sustained growth. To add optimism, BlackBerry’s Cybersecurity segment also delivered a positive revenue growth of 5% YoY last quarter.
But could these positive developments help BlackBerry stock continue soaring over the next year? Let’s discuss that.
Where will BlackBerry stock be in a year?
Interestingly, BlackBerry might separate its cybersecurity and IoT business units into two independently operated entities in the near future to enhance shareholder value. However, the timeline for the proposed separation is still unclear. Nonetheless, such a move could unlock the potential of each segment and allow them to focus on their respective markets and customers.
Overall, BB stock has been on a roller coaster ride in the last few years as macroeconomic uncertainties in the post-pandemic era have affected its business growth. And I don’t expect this trend to change overnight, as the ongoing macroeconomic and geopolitical uncertainties could keep BB stock volatile in the next year.
That said, I still find BlackBerry’s long-term growth outlook very strong, with the company striving to accelerate growth by enhancing its cybersecurity and IoT offerings with the help of artificial intelligence and machine learning technology. Given that, BlackBerry could be a great long-term growth stock at the current market price, especially after more than 60% losses in the last three years have made it look undervalued.
