After TD Cowen changed the business software company to "Buy" from "Hold" following its third-quarter earnings release and revised expectations, BlackBerry (BB, Financial) shares climbed 1.4% in premarket trade Friday.
Analyst Daniel Chan pointed out results above expectations and a notable increase in the company's forecasted free cash flow production, which he partly linked to net operating losses from Cylance, its cybersecurity division. Chan also upped his BlackBerry's price target to $4 from $3.25.
Though its segment on secure communications is volatile, Chan pointed out that BlackBerry's forward revenue multiple of 3.1 is remarkably below its cybersecurity rivals at 10.6 and Internet of Things peers at 4.9. Chan also talked about BlackBerry's Internet of Things division's premium value based on its market leadership and defensible posture.
This most recent update highlights TD Cowen's faith in BlackBerry's capacity to leverage its advantages while tackling problems in particular industry sectors.
