Ahead Of BlackBerry's Q1 Earnings, Stifel Says Market Is Still 'Misdefining' BB -- Here's Why It Sees 36% More Upside

Stifel said the shift in BlackBerry’s business model could support stronger margins and improved free cash flow generation over time, potentially leading to guidance increases.

• The brokerage initiated coverage on BB with a ‘Buy’ rating and a $12 price target, according to The Fly.
• Stifel believes the company is now a critical software provider for a wide range of industries, including robotics, industrial automation, and medical devices.
• BlackBerry is set to report its first-quarter earnings on Thursday, with expected earnings of $0.03 per share and revenue of $137.9 million, according to Fiscal.ai data.

BlackBerry's (BB) expansion of its QNX footprint has caught Wall Street’s eye, with Stifel arguing that it has evolved beyond its automotive roots into a mission-critical software layer powering the next generation of physical AI applications.

BB stock, which climbed 4% in pre-market trading on Wednesday, has already gained more than 130% so far this year, but analyst Suthan Sukumar believes that the market still ‘misdefines’ the Ontario-based firm.

BB Has Moved Beyond Automotive Software Supplier

Stifel initiated coverage of the shares with a ‘Buy’ rating and a $12 price target, according to TheFly. This implies a 36% potential upside to the stock’s closing price on Tuesday.

According to the firm, BlackBerry has evolved far beyond its traditional image as an automotive software supplier. Stifel views the company as a critical software provider enabling AI-powered systems across a wide range of industries, including connected vehicles, robotics, industrial automation, and medical devices.

The analyst also highlighted BlackBerry’s partnerships with major semiconductor firms such as Nvidia, Qualcomm, and AMD as a key competitive advantage.

All Eyes On BB’s Q1 Results

BlackBerry is set to report its first-quarter (Q1) earnings on Thursday, with Wall Street expecting earnings of $0.03 per share and revenue of $137.9 million, according to Fiscal.ai data. The software firm had reported earnings of $0.02 per share and revenue of $121.7 million in the previous corresponding period.

Stifel pointed to a shift in BlackBerry’s business model toward higher-quality, recurring royalty revenue. The brokerage believes this transition could support stronger margins and improved free cash flow generation over time, potentially leading to guidance increases.

BB Bulls Eye $15

Retail sentiment surrounding BB on Stocktwits has remained in the ‘bearish’ territory over the past 24 hours, but chatter was largely bullish.

One user expects the stock to climb to $15 after the earnings.

View this Stocktwits post

BB shares have declined 55% over the past year.

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