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BlackBerry (BB) Gained More Than 62% in 2017: Here's Why

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Shares of BlackBerry Limited (BB - Free Report) have gained 62.2% in 2017, easily outperforming the Zacks Wireless (non-US) industry’s rally of 10.9%.

Why the Surge


It was not long ago that BlackBerry was struggling due to declining smartphone sales. To overcome these challenges, in September 2016, the company had announced its decision to end all internal hardware development and outsource the same to its partners. The decision has proved to be highly beneficial and was the primary reason behind the stock’s impressive performance in 2017.

Robust software sales have aided BlackBerry’s results in the past few quarters. In fact, growth of its cybersecurity business is a huge positive. Of late, BlackBerry also inked multiple deals to enhance its software business.

The company’s newly formed joint venture, PT BB Merah Putih, to license its software and services for the production of handsets for the Indonesian market is impressive. Notably, the JV and its affiliates account for a significant portion of the mobile market in Indonesia. Blackberry also signed a cross-platform deal with Emtek — an entertainment, media and technology power house of Indonesia. The deal with Giuliani Partners to combat cyber threats is encouraging as well. Another agreement with Indian telecom enterprise, Optiemus Infracom Ltd, is worth mentioning. We are also impressed with the company's deal with the leading auto manufacturer, Ford Motor Company (F - Free Report) .

We expect BlackBerry to continue performing well in 2018 driven by its focus on the software business. Moreover, BlackBerry is not a highly leveraged company. This is indicated by the fact that the ratio of its long-term debt-to-equity (expressed as a percentage) currently stands at 32.7. This figure compares favorably with 47.9 for its industry and also the S&P 500 index, for whom the measure reads 82.9%.

Estimate Revisions

Upward estimate revisions reflect optimism in a stock’s prospects. BlackBerry scores impressively on this front as well. The stock has seen the Zacks Consensus Estimate for fiscal 2018 (ending February 2018) earnings being revised 60% upward, respectively, over the last 30 days. The bottom line for the same period is expected to be up 26.7% on a year-over-year basis.

Given the wealth of information at the disposal of brokers, it is in the best interests of investors to be guided by broker advice and the direction of their estimate revisions. This is because the direction of estimate revisions serves as an important pointer when it comes to the price of a stock.

Zacks Rank & Style Score

The above bullish factors are reflected in the company’s Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next one to three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Furthermore, the company’s Momentum Score of A highlights its short-term attractiveness.

Key Picks

Investors interested in the broader computer and technology sector may also consider NVIDIA Corporation (NVDA - Free Report) and Broadcom Limited (AVGO - Free Report) sporting a Zacks Rank #1 (Strong Buy).

NVIDIA and Broadcom have expected earnings growth rates (3 to 5 years) of 10.3% and 13.8%, respectively.

Zacks Editor-in-Chief Goes "All In" on This Stock

Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.

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