What happened
Shares of BlackBerry (BB -2.54%) fell 16.8% in February, according to data from S&P Global Market Intelligence. The stock lost ground due to a price target cut from an analyst and the market's shift away from software stocks.
Canaccord's T. Michael Walkley published a note on BlackBerry on Feb. 22, maintaining a buy rating on the stock but lowering his one-year price target from $10 per share to $7 per share. Walkley said that he continued to see a favorable industry backdrop benefiting the company's cybersecurity-software business but noted that the market is now generally valuing software stocks at lower multiples.
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So what
BlackBerry has attracted some attention as a meme stock, but its Internet of Things (IoT) and cybersecurity software businesses are going through some big changes. The company's share price has been pressured over the last year.
As part of its turnaround effort, BlackBerry is selling its non-core patent assets in order to raise cash to fund its new growth initiatives. The company has signed a deal with Catapult IP Innovations to sell these patent assets for $600 million, and the drop-off in patent-licensing revenue will create some uneven performance comparisons in the near term.
Now what
BlackBerry stock has continued to fall early in March's trading. The company's share price is down roughly 4.4% in the month so far.
BlackBerry is guiding for its Q4 revenue to come in between $50 million and $55 million, suggesting a roughly 76% decline from the $215 million in adjusted sales it posted in last-year's fourth quarter. Management said that it's seeing strong performance from its IoT unit, but the team also cautioned that that the company is facing headwinds related to production constraints impacting the auto industry.
BlackBerry now has a market capitalization of roughly $3.7 billion and is valued at approximately 4.7 times this year's expected sales.
