The case for BlackBerry at $45 US a share

BlackBerryLtd. shares have been on a hot streakrising more than 60 per cent in recent weeks and one technologyanalyst thinks some of the company's new products have the potential to help push the stockto$45 USin three years.

In a recent report,Gus Papageorgiou, associate director of technology research at Macquarie Capital Partners, pointed to two BlackBerry products itsRadar system for monitoring truck trailers andcontainers,and the QNX operating software system used to run vehiclesystemsas driversof the company's future.

The Radar system can monitor the load status of atruck trailer, its location, andwhether the doors are open or closed, among other things. That can help shipping companies better manage their trailers.Papageorgiou says some early customers are reporting a 17 per cent reduction in the number of trailers they require, along with opportunities to charge customers who hold on to trailers too long.

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Meanwhile,BlackBerryQNXcurrently dominates the infotainment software market for vehicles with an estimated market share of 50 per cent,Papageorgiou'sreport says. The software runs in about 60 million vehicles.

Last year, Ford Motor Co. signed a deal with BlackBerry to ramp up the installation of QNX in its vehicles. Ford and BlackBerry also reached an agreement to shift up to 400 workers to the automaker to bolsterits efforts to develop a self-driving car.

"I think these are very healthy markets where they have advantages," Papageorgiousaid in a recent interview withDianneBucknerfor CBC News Network's On the Money.

Talk of a comeback

7 years ago

Duration 6:18

Gus Papageourgiou of Macquarie Capital Partners sees potential for BlackBerry

"The business they're getting into is highly recurring software business with high margins, so I think there is potential here."

A formerleader in the smartphone business, BlackBerry's fortunes tumbled amidst strong competition in the handset market.The battered company has since been trying to reinvent itself with a new focus on software.

"I think they're finally delivering some promising business lines,"Papageorgiousaid.

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The company's stock has been on the rise of late, hitting levels not seen in four years.Since the end of March, it has gone from under $10 on the TSXto close Thursday at $15.12. On Nasdaq, the stock closed at $11.22 US, up from about $7 US at the end of March.

Papageorgiou said the Radar and QNX innovations could contribute $2 billion or more in software revenue in three years, and earnings per share of about $1.80. Based on a price-earning multiple of 25, that translates to a stock price of $45 US, he says.

For the more immediate future,Macquarie'stake onBlackBerry'sstockis decidedly more modest. The firm bumped its 12-month target from $10.50 US and $14 Cdn to $11.80 US and $16.20 Cdn.

Given the volatile nature of the technology market, it'snot clear cut that things will play out in favour of BlackBerry. A recent article in Forbes pointed out that both Apple and Google's parent company, Alphabet, have been showing interest in the automotive market.

Apple has been reported to be working on its own operating systems for a self-driving car, while Alphabet has launchedits own Android Automotiveinfotainment system. Both firms have massive resources to throwat automotive projects.