The last few years have hit BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) hard. Shareholders of this provider of mobile communications solutions lost money. Remember when most business people owned a BlackBerry phone? That was a long time ago. However, a recent smartphone launch and a possible takeover in the future are telling us there is still hope for BlackBerry.
The KEYone might be the key to success
Sales of BlackBerry’s smartphones have been gloomy during the last years. It couldn’t compete with other phone brands, and it lost a large market share. This failure showed in BlackBerry’s financials. Things turned out so bad that earnings per share, return on equity and net margin have been in negative territory since 2013. We can’t even calculate a P/E. However, the launch of the KEYone smartphone on May 31, 2017, might be a turning point for BlackBerry.
While it is difficult to see the differences between the smartphones that are launched monthly, the BlackBerry KEYone stands out. The TCL Communications phone — the Chinese company that designs, manufactures, and sells BlackBerrys — has several unique features, such as its physical keyboard below the screen.
Former BlackBerry fans are going to feel nostalgic when their thumbs touch the keyboard of BlackBerry KEYone. Those who have never known the era of the BlackBerry OS and the BlackBerry Bold will also find something in it, if only for the uniqueness of its design and solid construction, but they will be more difficult to convince.
The BlackBerry KEYone, whose software is designed in Canada by BlackBerry directly, will receive all Android security updates quickly. It also has an excellent autonomy, which can exceed two days.
TCL Communications has great ambitions for the Canadian brand. The company, which also designs Alcatel phones, wants to launch several different BlackBerry models in the next few years for all budgets and tastes. The KEYone is certainly a good step in this direction, since it demonstrates that it is possible to create a modern phone, while respecting the legacy of BlackBerry.
Only a few days after its launch, this smartphone is such a huge success that BlackBerry is struggling to meet the high demand.
Favourable report and positive analyst commentary
BlackBerry’s stock jumped by nearly 11% on the TSX on June 1 after a report, issued by Citron Research, identified the company as a likely buyout target at as sizable premium. The online stock commentary website wrote that BlackBerry’s QNX software, which is installed in about 60 million vehicles, makes the company an attractive acquisition target for Qualcomm, Nvidia, or NXP Semiconductors. The report also said that the company’s shares are likely to reach US$20 on the Nasdaq within 24 months.
BlackBerry’s shares rose recently after positive analyst commentary. Gus Papageorgiou, an analyst from Macquarie Research, has a 12-month target of $16.20. He thinks that the company’s shares could rise to US$45 by 2020.
Considering the optimistic outlook for BlackBerry, I would say that this stock is a buy. However, it would be prudent to not put a lot of your money in it right now, since it’s still a risky investment. You could wait until earnings return to positive before loading up on this stock.
