BlackBerry Limited’s BB shares have rallied 21.3%, outpacing the Computer Software industry’s and the S&P 500 composite’s growth of 18.7% and 8%, respectively, in the past month.

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BlackBerry has also outperformed peers within the cybersecurity space, such as Fortinet FTNT and CrowdStrike Holdings, Inc. CRWD. Fortinet and CrowdStrike have gained 5.9% and 12%, respectively, over the same time frame.

BB stock closed the session at $3.92, down 37.2% from its recent 52-week high of $6.24. Will the stock register further gains in 2025? Is this pullback a buying opportunity?

Let us analyze the stock in detail to ascertain if the stock is worth investment consideration.

QNX Emerges as a Tailwind for BB

BlackBerry has made a sharp pivot by offloading its underperforming Cylance unit to Arctic Wolf and doubling down on its IP-rich QNX platform. The renamed QNX division (formerly IoT) is being positioned as the strategic core going forward. The transaction with Arctic Wolf unlocked $80 million in initial cash proceeds and 5.5 million shares, while preserving BlackBerry’s AI/ML patent assets and tax losses. BB expects these tax losses to provide a shield for future profits generated by its US entities.

BlackBerry’s QNX business, formed by rebranding its IoT unit, is gaining from strength in the automotive segment, particularly strong demand for its solutions across the advanced driver assistance systems (ADAS) market and digital cockpit domain. The rapid adoption of the QNX platform in the General Embedded markets is a positive factor. The increasing adoption of the next-generation version of the QNX operating system, SDP 8.0, in the Auto and General Embedded market and the release of the QNX General Embedded Development Platform are positive factors.

Earlier in the year, QNX and Microsoft MSFT partnered to aid automakers in building, validating and refining software within the cloud to power the evolution of SDVs. The partnership will bring the QNX Software Development Platform 8.0 to Microsoft Azure, offering automakers a comprehensive cloud-based environment to accelerate innovation while reducing development risks. Also, QNX and Microsoft plan to extend their collaboration to include the QNX Hypervisor and the QNX Cabin. Revenues from the QNX business totaled $65.8 million, surpassing the company’s guidance of $60-$65 million in the last reported quarter. During the quarter, it continued its design win momentum in the core digital cockpit and ADAS.

Growing momentum in QNX Cabin with multi-year deal wins from the top 10 global auto OEMs further cushions its prospects. Despite delays in automotive software development, QNX’s royalty backlog grew year over year to about $865 million. This shows that QNX is adding future royalty revenues faster than it’s being recognized, which BlackBerry sees as a strong sign of the business’s long-term health.

Story Continues

Due to recent tariff changes, especially on automotive goods, BlackBerry is currently unsure how this will affect its business. While it does not expect a direct impact on products and services, there may be indirect effects on its customers, such as supply chain disruptions and changes in demand. Given the current uncertainty, BlackBerry is maintaining the upper end of the revenue guidance ($260-$270 million) shared at Investor Day in October but widening the lower end. It now expects QNX revenues to fall within the range of $250 million to $270 million.

Momentum in the Secure Communication Bodes Well

Momentum in the Secure Communication division, driven by solid operational execution and cost-saving efforts, is working in favor of BlackBerry. Fiscal fourth-quarter revenues of $67.3 million beat the high limit of the company’s forecast ($62-$66 million), driven by strong AtHoc revenues and renewals in the core German market.

Healthy momentum in UEM stemmed from rising deal wins from government agencies, top banks and law firms. Expansion of the deal with the Malaysian government bolsters both the contract length and the number of licenses. The Malaysian government is a great example of successfully using its full Secure Communications portfolio, and it is working to replicate this model in other regions. Management highlights this division to be a key contributor to BlackBerry’s overall EBITDA and cash flow.

BlackBerry is taking a cautious stance on the Secure Communications division due to ongoing turmoil in its core government markets. The potential impact of DOGE and other shifts within the U.S. administration, as well as political changes in Canada, Germany and other regions, is likely to create a challenging and unstable environment. While significant effects are yet to be seen, the situation remains unpredictable. These developments could lead to short-term disruptions for the business.

BB’s Improving Cash Generation

BlackBerry's total adjusted EBITDA for fiscal 2025 was $39.3 million, including Cylance. This is a $54 million improvement from last year after adjusting for the patent sale in early fiscal 2024. Cost-cutting and restructuring measures are driving up profitability for BlackBerry. It has successfully achieved its initial target of cutting back roughly $150 million from its run rate.Zacks Investment Research

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Moreover, BlackBerry’s cash performance exceeded expectations. Cash and investments grew by $144 million, mainly due to a strong boost in operating cash flow, which reached $42 million, along with the receipt of the first $80 million payment from the Cylance deal. It also reviewed the cost structure of its new Secure Communications division, which includes UEM, AtHoc and Secusmart. The goal was to better focus on a more targeted customer base and improve overall cost efficiency.

Management expects an additional $75 million of cash to be added in fiscal 2026, including the second Cylance payment of $40 million, positioning the company to reinvest or return capital opportunistically.

Estimate Revision Activity & Valuations For BB

Analysts appear bullish, as indicated by the estimate revision activity. EPS estimates for the current fiscal year have improved to 10 cents compared with 7 cents in the past 60 days.Zacks Investment Research

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BB stock is trading at a discount with a trailing 12-month price/book multiple of 3.25 compared with the industry’s multiple of 5.87.Zacks Investment Research

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Time to Buy BB Stock?

BlackBerry's pivot toward its QNX business with increasing momentum in the automotive and embedded markets and a growing royalty backlog, enhances future prospects. The company’s improving financials, including positive EBITDA, robust cash generation, and ongoing cost-cutting measures, support a sustainable turnaround. Trading at a discount and backed by strong estimate revision activity, BB presents a compelling buying opportunity.

BB sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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