Blackberry Delivers Outclass for FQ2:18 That Stirs Potential for Takeovers
BlackBerry Ltd (NASDAQ:BBRY) started off the fall season with some rising investor enthusiasm after serving up a nice second fiscal quarter earnings beat last Thursday, sending shares on an almost 7% upturn Friday.
Top analyst Michael Walkley at Canaccord recognizes the strength of the smartphone giant’s second quarter, and even sees prospective acquisitions down the line as a way the company can bring shareholder value to the table while boosting long-term revenue and earnings gains. Coming in to the tune of $27 million above Walkley’s forecast with more robust than anticipated licensing revenue, the analyst attributes this to the giant’s stellar revenue showcase for the quarter. Blackberry handed over $249 million in revenue against the analyst’s projection looking for $215 million. It certainly helped the giant to benefit from catch up payments that drove SAF revenue up $9 million ahead of the analyst’s projection.
However, though company outclassed Walkley’s expectations, for now, amid valuation and intense growth competition among non-regulated consumers, the analyst surveys optimistically from the sidelines, reiterating a Hold rating on BBRY stock with a price target of $10, which represents a just under 11% downside from where the shares last closed.
Additionally, while for the second fiscal quarter of 2018, the giant reaped the upper hand of the one-time upfront payment for a new IP license, the analyst does not see licensing revenue performing as well in the third fiscal quarter, noting, “these deals are lumpy by quarter.” Despite expecting licensing revenue to not be as strong in the third fiscal quarter, weighing positively in Blackberry’s corner are “long-term growth drivers include growing device sales from handset licensing customers combined with ongoing IP and technology licensing opportunities,” asserts Walkley.
Likewise, in the second fiscal quarter, notwithstanding the effects of deferred revenue from 2016’s Good Technologies takeover, BBRY’s enterprise software and services revenue surged 16% year-over-year coupled with bookings that saw a 19% year-over-year climb. Blackberry Technology Solutions’ (BTS) Radar developed its alliance with Titanium, which the BBRY team underscored as a victory for the quarter, with BTS taking on FleetComplete as a channel partner. Meanwhile, with QNX securing a collaboration to offer its operating system as well as its infrastructure for Delphi’s CSLP self-driving solution, it is no wonder Walkley commends this “solid” quarter for the giant.
Moving forward, “We will continue to monitor the development of software growth driven in part by BTS growth initiatives including ADAS, Radar and other, but we do not expect meaningful revenue until 2H/ FY19 or later from these opportunities. For FY18, management still anticipates software and professional services revenue growth of 10-15% off the base of $687M from FY17. With its $1.9B in net cash, we believe BlackBerry has the capital to invest in growth both through hiring more people and potentially through acquisition. In fact, we view potential acquisitions with its strong balance sheet as the most likely way BlackBerry can create shareholder value and augment revenue and earnings growth longer term,” concludes Walkley, who looks for “steady growth” in BBRY’s three business units of Enterprise software and services, BlackBerry Technology Solutions, and Licensing, IP, and other.
With the giant moving forward boasting $1.9 billion in net cash, the analyst keeps his attention captivated to prospective accretive acquisitions, seeing this as the most probable trajectory for the company to achieve substantial upside through fiscal 2020.
Michael Walkley has a very good TipRanks score with a 66% success rate and a high ranking of #46 out of 4,676 analysts. Walkley garners 19.2% in his yearly returns. When recommending BBRY, Walkley earns 0.0% in average profits on the stock.
The top analyst is not alone in playing it safe on the smartphone giant, as TipRanks analytics exhibit BBRY as a Hold. Out of 6 analysts polled by TipRanks in the last 3 months, 2 are bullish on BlackBerry stock, 3 remain sidelined, and 1 is bearish on the stock. With a loss potential of 4%, the stock’s consensus target price stands at $10.68.
Here’s Why You Shouldn’t Bet Against Musk’s Tesla in Trucking
Tesla Inc (NASDAQ:TSLA) revealing its electric car giant eyes have set the next goal on breaking into the semi-truck-verse is no small feat; a move that Gene Munster – framing enthusiastic groundwork from his research-driven, venture capital firm Loup Ventures – angles to “[haul] heavy disruptive potential.”
CEO Elon Musk in creating an electric semi-truck not only could tap into one of the leading domestic enterprises but would stride “another leap forward in making Tesla’s grand vision a reality,” writes Munster, who acknowledges there will be years ahead before the market is disrupted- but remains confident in Tesla’s potential all the same.
Munster sees compelling prospect in the cards for Tesla in the next decade: “Based on Tesla’s history, the most logical go-to-market approach would be staggered: Within about 3 years, Tesla could target short haul trucking (think of UPS or Fedex trucks that return to a depot to be charged at night). Then in about 5 years, Tesla could target long haul trucking, and, in 6-10 years, offer a fleet of trucks as a service. We expect the Oct 26th event will be short on details (we don’t expect details on pricing or delivery date) and long on the opportunity. That opportunity is ripe for Tesla’s taking, considering legacy truck manufacturers’ past struggles with innovation.”
Overall, “The trucking industry is downright massive,” cheers the analyst, who believes, “Upending an industry with such deep roots that touches a sizable portion of our economic activity is not a simple or a swift process, but its core elements are ripe for today’s disruptive forces.”
For the bears who might question whether the giant can truly execute the trucking tour de force, the analyst in short answers yes- yes Tesla can. Essentially, Munster takes a Vegas approach where the house always wins- but in this case, “Musk and Co.” are the house, and the research analyst adamantly advises against placing odds against the empire’s ability to spin pipeline dreams into financial gold- even if takes years of patience to see fully autonomous trucking burgeon into fruition. For Munster, the bigger, long-term iron in the fire points to that of autonomy.
How does Munster’s bullish gamble weigh up against the word of the Street? It appears other voices are not as willing to bet on Musk’s brainchild, as TipRanks analytics demonstrate TSLA as a Hold. Based on 19 analysts polled by TipRanks in the last 3 months, 5 rate a Buy on Tesla stock, 7 maintain a Hold, while 7 issue a Sell on the stock. The 12-month average price target stands at $297.67, marking a nearly 13% downside from where the stock is currently trading.
Snap Cleverly Weds Augmented Reality and Branding
Last week, the advertising world said hello to new Snap Inc (NYSE:SNAP) 3D World Lenses, with the tech player likewise kickstarting Sky Filters (where a user’s camera can pinpoint the sky to superimpose special visual effects from stars to clouds) and Auto Stickers.
Drexel Hamilton Brian White continues to back this social media platform’s gains prospects as the company continues to add new innovative twists and turns to add more savvy fuel to the Snapchat ecosystem’s fire. While Snap users had already welcomed New Lenses with 3D experiences back in April, the analyst believes it is worthy to note this new upgrade smartly adds advertisers into the mix, which “will bring AR to brands around the world.” One of the first advertisers to key into this new opportunity will be Warner Brothers Pictures’ forthcoming feature picture, Blade Runner 2049.
In reaction, the analyst maintains a Buy rating on SNAP stock with a $30 price target, which implies a 106% increase from where the shares last closed. (To watch White’s track record, click here)
Offering a glimpse into Snap’s latest innovative tango move, White highlights: “The demo showed off a Snap of a 3D animated Spinner interacting with the real world in a cool AR experience. Similar to the Dancing Hot Dog that has been a huge success on Snapchat (now at over 2 billion views vs. over 1.5 billion on August 10), advertisers can now bring 3D characters (and things) to life in the real world via AR. For example, Snap also showed a Snap of an animated, 3D cold Bud Light Vendor offering a Bud Light to people walking the streets of NYC.”
Glancing into a future that White predicts is likely to be rife with “more innovations” in these next months, he muses enthusiastically, “We can only imagine the 3D World Lens creations that brands will develop for Snapchat with this new innovation.”
Not everyone out on Wall Street is quite as excited regarding this tech player’s upside potential as White, considering TipRanks analytics showcase SNAP as a Hold. Out of 27 analysts polled by TipRanks in the last 3 months, 8 are bullish on Snap stock, 14 remain sidelined, and 5 are bearish on the stock. With a return potential of nearly 3%, the stock’s consensus target price stands at $14.93.