BlackBerry (TSX:BB, Nasdaq:BBRY) is one of many companies looking to win in the Internet of Things space, but acquisitions could hasten its progress, says Cormark analyst Richard Tse.
Tse spent time recently with BlackBerry CFO James Yersh. He says the meetings were quite timely, with the company’s Q1, 2016 results just in the rearview mirror and its annual security summit imminent. The analyst says the company’s transition from a device maker to software player is one of considerable scale, he sees progress on several fronts. Importantly, he thinks BlackBerry could be feeling expansive enough to make a considerable investment in them.
One space Tse thinks BlackBerry might pay to play in is The Internet of Things.
“There’s no denying this represents a big opportunity for many players, not just BlackBerry; yet, BlackBerry has all the necessary assets and its arguable presence with QNX in automobiles sets up a base for this opportunity,” says Tse. “To us, it sounded like we could see the company expanding its presence in and outside that vertical. And consistent with the company’s recent conference call comments, we believe acquisitions could be a big driver here – we wouldn’t be surprised to see the company spend +$500 MM when it comes to pivoting harder into this market.”
Tse also sees progress in software and in the company’s BES business, where enterprise sales are increasing.
In a research update to clients Friday, Tse maintained his “Buy” rating and one year target of (U.S) $14.00 on BlackBerry. Shares of the company closed Friday at $7.77.